This Week’s Spotlight: “No Ratio”
The No Ratio Loan Program is designed for borrowers who prefer not to disclose their income or have difficulty meeting traditional debt-to-income (DTI) ratio requirements. This program is particularly useful for self-employed individuals, real estate investors, high-net-worth borrowers, who have significant assets but may not have easily verifiable income.
Key Features of a No Ratio Loan:
- No Debt-to-Income Ratio Consideration – Lenders do not calculate or require a specific DTI ratio.
- No Income Documentation – Borrowers are not required to provide tax returns, W-2s, or pay stubs.
- Higher Down Payment Requirements – Typically, a 20-30% down payment is required to offset the risk.
- Higher Credit Score Needed – Borrowers usually need a 680+ credit score, though requirements vary by lender.
- Strong Asset Reserves – Lenders may require 6-12 months of reserves to ensure financial stability.
- Non-Owner-Occupied and Investment Property Friendly – Ideal for real estate investors looking to expand their portfolio.
Who Benefits from a No Ratio Loan?
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- Self-employed borrowers with complex or fluctuating income.
- Investors who have strong cash flow but may not show high taxable income.
- High-net-worth individuals who rely on assets rather than regular income.
- And these other types of borrowers:
Considerations:
- Higher Interest Rates – Since there’s more risk to the lender, rates may be higher than traditional loans.
- Larger Down Payment – Expect a 20-30% minimum down payment.
- Not Available for All Property Types – Some lenders may restrict No Ratio loans to specific property types.
Let’s help your clients turn their dreams into reality! Contact Team No Limit today to learn more or get started!
