Our client was under contract to purchase a new home in Key Largo, Florida. But, he was having a hard time getting approved for a loan due to his difficulty with proving his income.
First, he tried going to his bank. However, his bank denied his loan application because he was not able to qualify under the traditional route via tax returns, W2s and pay stubs. Our client had not filed his tax returns for 2019 yet, and his previous years of tax returns showed losses. And he does not receive W2s or pay stubs from his employer.
Second, he tried going to a non-bank lender under its bank statement program. Our client, however, did not have any business bank statements showing deposits from his companies. So, this lender denied him a loan as well.
He came to us looking for help. This was definitely a difficult situation, but we found a creative solution.
We found a very niche loan product known as the “lite doc program”:
- When it comes to proving income, this program does not require tax returns, W2s, pay stubs, or bank statements.
- Instead, you provide much simpler documentation.
- If you’re employed: You provide a written verification of employment showing your current income only. In other words, you’re not judged on what you made years ago.
- If you’re self-employed: You provide a profit-and-loss statement covering just the past 12 months. This P&L statement can even be prepared by yourself, not a CPA.
This was the perfect solution for our client. We went the employed route and provided a one-page letter from his employer stating his current income only.
That’s all it took to satisfy the lender’s income requirement. We were able to close his loan with a 30-year fixed interest rate and only a 25% down payment.
Thanks to this unique loan program, he and his wife are now proud homeowners and residents of Key Largo.
Interested in seeing if the lite doc program is a good fit for your loan scenario? Contact us here.