- Occupancy
- Primary, Second Home, Investment (income qualifying)
- Eligible Borrowers
- US Citizen, PR Alien, Non-PR Alien (w/ SSN). Foreign National & ITIN ineligible.
- Ownership Seasoning
- Primary: none required (10% CLTV haircut if <6 months) · 2nd Home / Investment: 6 months
- Transaction Type
- Cash-Out, Standalone Second only
- Maximum DTI
- 50% standard (all doc types) · Loan amounts > $750,000 max DTI is 43%
- Maximum Combined Loan
- Combined loan amount (1st + 2nd) not to exceed $5,000,000
- Products
- 10, 15, 20, 25, 30-Year Fixed · 20, 30-Year Interest-Only (IO must qualify on full amortizing payment, not IO payment)
- Interest-Only Requirements
- Existing 1st lien must be fully amortized · Primary residence only · Max CLTV 70% · Min FICO ≥ 700
- Standard Full Doc
- 1 or 2-year W-2s only with 60-day paystubs (or) Tax Returns for self-employed borrowers
- Personal Bank Statements
- 12 months personal w/ 2 months business showing cash-flow. If 2 months business statements are not available, the expense factor is 15%.
- Business Bank Statements
- 12 months business statements, use 50% expense factor. If expense factor needed is >50%, provide an Accountant's Expense Statement. Min factor applied is 20%. Business statements may be combined with personal when self-employment cash flow is present in both without co-mingling of funds.
- P&L Only
- P&L only prepared by a CPA/EA — max 80% CLTV
- Eligible Property Types
- SFR, 2-4 units, Condo, Non-Warrantable Condo (max 75% CLTV), Rural Property (max 70% CLTV)
- Ineligible Property Types
- Condotels, row, commercial/agricultural, leasehold, land trust, age-restricted, hobby farms, modular, land contract, log homes
- Acreage
- Max 10 acres on all Closed-End Second Mortgage products
- Appraisal Requirements
- AVM only allowed with 80% confidence factor on Primary Residence or 2nd Home, must also provide a Property Condition Report ordered through Defy AMC. AVM-only max CLTV 80%.
- Full Appraisal
- Full standard 1004 appraisal required. On Loan Amounts >$400K and Investment properties, 1007 required on Investment
- AVM Requirements
- Defy to pull AVM. The AVM must have a > 80% confidence factor.
- Listed Property
- Must be off the market for 6 months prior to the application date
- Declining Markets
- Reduce max allowed CLTV by 5%
- Qualifying Score
- Use the primary wage earner's score — middle of 3, lower of 2 scores. (If bank statements are used for income and the business has 50/50 ownership or borrowers are tenants in common, use the lower of the 2 borrower scores.)
- Tradeline Requirements
- Open and active tradelines: 3 tradelines rated > 12 months (or) 2 tradelines for > 24 months w/ activity (or) 1 mortgage / installment loan > 36 months
- Limited Tradelines
- Allowed Primary only when borrower has 7 years of credit history and a qualifying score of 700 — max 75% CLTV
- Mortgage History
- 0x30x12
- BK / FC / SS / DIL Seasoning
- 84 Months · 48–83 Months Max CLTV 80%
- Reserves
- No minimum reserves
- Title Policy
- ≤ $400K: O&E acceptable · > $400K: Full Title Policy
- Flood Insurance
- Flood escrow required (lesser of 1st UPB + 2nd or $250K)
- Ineligible States / Areas
- HI lava zones 1-2 · Baltimore City, MD
- State Overlays
- TN: max 15-year term · TX: 2nd Home & Investment only · PA: reduce max CLTV to 80%
- HPML (Higher-Priced)
- Eligible w/ overlays: Primary Residence only · Min score 720 · Max loan $500,000 · Max CLTV 70%
- Solar Liens
- Allowed per FNMA guidelines · Solar liens must be fully subordinated or paid off with proceeds, otherwise the property is not eligible
- Hazard Insurance
- 100% replacement cost; covering both 1st & 2nd (or) RCV from HOI outlining coverage for 100% replacement
- Escrows Required When
- 1st lien is not escrowed (and/or) combined 1st & 2nd loan amount is < $250,000
- Document Validity Period
- Appraisal/Title 120 days · AVM 90 days · Credit 120 days