Bypassing The Big Banks for a Home Loan
When it comes to securing a home loan, every “big bank” has a set of criteria they use to discern whether or not to award a loan:
- A DTI (debt-to-income ratio) of 43% or less
- A 20% down payment
- A 720+ credit score
- 6, 9,12 or 18 months of assets/reserves
- 4 to 7 years removed from a bankruptcy or major credit-hurting “life” event
Do you meet these criteria? It’s OK if you don’t—they’re pretty stringent (especially for self-employed professionals).
Here’s the good news: there are loan programs for self-employed individuals that “expand” the above criteria:
- You can put as little as 5% to 10% down
- You can have a 55% DTI
- You can have a 580 credit score
- You can have a credit-affecting “life event” as little as a few months ago
Now, the above lineup probably seems too good to be true, and it is at first glance.
It all comes down to common sense and balance.
I’m happy to discuss this further with you if you have any questions.