Our clients had spent the past two years constructing their family dream home in Key West, Florida. In 2019, they obtained a $560,000 purchase loan from a major bank to purchase the fixer-upper. In 2020, they ran over their construction budget and needed more money. Due to the pandemic, they had problems finding a construction loan. Therefore, they resorted to a one-year $1.25M bridge loan from a private lender at a 10% interest rate to pay off the first mortgage and finish the construction.
With the construction nearing an end, they began to look for an end loan to refinance the construction bridge loan to a permanent loan with a lower interest rate.
That’s when they came to us for help.
This was definitely a difficult situation, particularly because one of the borrowers was furloughed from employment, and the other borrower was employed but his debt-to-income ratio (DTI) was too high.
We provided them a creative solution.
We placed them under a very niche loan product known as the “no-ratio program”:
- This program does not require proof of income.
- Instead, you just have to provide verification of your employment or self-employment.
- If you’re employed: The lender simply contacts your employer to perform a verification of employment.
- If you’re self-employed: You simply provide a letter from your CPA, accountant, or tax preparer stating your title, ownership percentage, and business inception date.
This was the perfect solution for our clients. No income verification was needed, and their DTI ratio was not even calculated, hence why the program is called “no ratio.”
We obtained for them a 5/6 adjustable-rate mortgage, where the rate is fixed for the first five years and then adjusts every six months thereafter.
Our clients were able to pay off their private lender seven months before the maturity date, and their interest rate is now in the low 5’s, much better than the 10% they had been paying.
Interested in seeing if the no ratio program is a good fit for your loan scenario? Contact us here.