Entrepreneurs bear most of the risks of their business while also enjoying most of the rewards. Outside the business context, what personal benefits does entrepreneurship offer? Enter the entrepreneur mortgage program.
This program is designed for the “near-miss” situation, where the borrower’s home loan application was denied by a traditional bank for some characteristic that just fell outside Fannie Mae or Freddie Mac guidelines (e.g., less-than-perfect credit or non-warrantable condo).
For entrepreneurs looking for more flexible guidelines, the entrepreneur mortgage program could be the key to purchasing a new primary residence, refinancing their current one, or even constructing a new home from the ground up.
Read on to discover the program’s attractive features (super jumbo loan size, no mortgage insurance, high loan-to-value), and eligibility requirements.
Who qualifies for the entrepreneur mortgage?
To qualify for this program, the borrower must meet at least one of these four criteria:
| Criteria | Notes |
| Majority business owner | Must have company sales in excess of $1 million |
| Executive management team member | Must have company sales in excess of $1 million |
| Liquidity in excess of $1 million | Liquidity is defined as cash and marketable securities not restricted by retirement accounts, irrevocable trusts, etc. |
| Income in excess of $150,000 | Must have post-closing reserves in a deposit account not less than six months of carrying costs |
Therefore, the entrepreneur mortgage program is designed to attract high-income or high-net-worth individuals with spheres of influence who are looking for high loan amounts and fast approval and closing times.
Let’s explore the entrepreneur mortgage program
What makes our mortgage for entrepreneurs program special?
The entrepreneur mortgage program is noteworthy because it is a portfolio loan program, meaning the lender holds on to the loan in its portfolio instead of selling it to an investor on the secondary mortgage market.
Since the lender does not have to conform to investor guidelines, they have more freedom and flexibility to offer appealing features for entrepreneur borrowers as set forth below.
Super jumbo loan amounts available
The maximum loan amount under this program is $3 million, but an exception can be made for a larger loan if there are compensating factors to offset the risk.
Up to 95% loan-to-value (down payment as low as 5%)
This program offers high LTVs at these loan amount tiers:
| Loan Amount | Maximum LTV |
| <= $1,000,000 | 95% |
| $1,000,001 – $2,000,000 | 85% |
| $2,000,001 – $3,000,000 | 80% |
For single-family residence purchase transactions, this means a down payment as low as 5% as long as the loan amount is $1 million or less.
There are certain caps on the LTVs as follows:
| Scenario | LTV restriction |
| Cash-out refinance | Reduce maximum LTV by 10% |
| Warrantable condominium | Maximum LTV is 90% |
| Non-warrantable condominium | Reduce maximum applicable LTV by 5% |
Despite those LTV restrictions, the entrepreneur program remains impressive. For example, 90% LTV up to $1 million on a warrantable condominium is uncommon. And, the lender has a risk appetite for non-warrantable condo properties (with the 5% LTV reduction), while more traditional lenders refuse to lend on non-warrantable condos altogether.
Any loan purpose allowed
The home loans for entrepreneurs program flexibly accepts all loan purposes, including new construction:
- Purchase
- Delayed financing
- Rate-and-term refinance
- Cash-out refinance
- Construction-to-permanent
Regarding delayed financing, that situation applies when the borrower purchased the subject property all-cash and is subsequently looking to put debt on the property to recapture their liquidity.
For cash-out refinances, the lender’s maximum cash-out proceeds allowed at closing is $500,000, but an exception can be made for higher cash-out amounts.
For entrepreneurs looking to build a new home, the lender offers a construction-to-permanent loan, also known as the “one-time close” program. This type of loan automatically converts the construction loan to a long-term mortgage after project completion, conveniently saving the borrower from two separate closings and duplicate closing costs.
No private mortgage insurance (PMI) required
Another advantageous feature of this program is the exemption from private mortgage insurance (PMI).
PMI is a type of mortgage insurance typically required when the down payment is less than 20% of the home’s purchase price (or, in the scenario of a refinance, when your equity is less than 20% of the home’s value).
This insurance is designed to protect the lender, not the borrower, if the borrower stops making payments on the loan.
Under the entrepreneur mortgage program, the PMI requirement is waived. Not having to pay the mortgage insurance premiums can lead to significant cost savings over the life of the loan.
Flexible terms
The lender offers 10-year and 15-year fixed rate terms (fully amortizing), as well as annual rate mortgages (5/6, 7/6, and 10/6 SOFR ARM, based on a 2.75% margin).
To learn more about ARMs, read our blog article, How Does an ARM Mortgage Work?
Speedy approval and closing times
Because this is a portfolio loan program, the lender does not have to strictly adhere to Fannie, Freddie or other investor guidelines. This translates to flexibility and faster approval and closing times for the borrower.
Take advantage of the attractive loan features today
What are the other requirements of the entrepreneur mortgage program?
Here is a summary of the other main requirements:
| Parameter | Requirement |
| Occupancy | Primary residence (all borrowers must occupy the subject property); investment properties not allowed |
| Property type | 1-unit properties (SFRs, warrantable condos, non-warrantable condos, PUDs) |
| Available markets | Florida and Texas |
| Credit score | Minimum 720 |
| Debt-to-income ratio | DTI not to exceed 43% |
| Citizenship | U.S. citizens and permanent resident aliens |
| Income verification | Full documentation (tax returns) |
| Appraisal | Required (2nd appraisal may be required depending on loan amount) |
Because this program is a portfolio loan program, the lender has the flexibility to grant exceptions to the above guidelines. For example, if the borrower’s DTI is slightly higher than 43%, they may still qualify if they have a high credit score.
Other mortgages for entrepreneurs
The entrepreneur home loans program requires full documentation of income through tax returns and other documentation as applicable including W2s and paystubs.
We recognize that full documentation of income through tax returns is not always possible or ideal for entrepreneurs.
For entrepreneurs and other self-employed borrowers who want an alternative method of showing income, it’s worth exploring a high-net-worth mortgage, where the borrower can qualify by using assets as income.
We also offer bank statement programs, profit-and-loss statement programs, and other creative self-employed mortgage programs.
Finally, we offer no-income verification mortgage programs where the debt-to-income ratio is not calculated, and income and employment are not verified at all.
In conclusion, securing a mortgage as an entrepreneur doesn’t have to be a daunting task. With tailored programs designed to accommodate unique financial situations, you can achieve your homeownership dreams. Explore the various loan options and benefits available to you, and take the first step towards a seamless mortgage experience. Contact us today for a personalized consultation.
