| Loan Terms | - Fixed: 30 years, and 15 years
- ARM: 5/6, 7/6 and 10/6 SOFR ARM (ARMs are not permitted on Investment Property)
- Margin: 2.75%
- Caps: 2/1/5 for 5/6, 5/1/5 for 7/6 and 10/6
- 5/6 ARM qualifying rate: Higher of note rate + 2% or fully indexed rate
- 7/6 and 10/6 ARM qualifying rate: Higher of note rate or fully indexed rate
- Interest only: Qualify using payment based on 20 year amortization including the principal component of the payment
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| Occupancy | Primary Residence only |
| Qualifying Ratios | | Product | Term | I/O Term | Amortization Term |
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| 30 Yr Fixed I/O | 360 | 120 | 240 |
- Not allowed for First Time Homebuyer
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| Minimum Loan Amount | - Agency loan limit + $1; or
- $400,000 with manual pricing
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| Mortgage Insurance | Not required |
| Eligible Borrowers | - US citizens
- Permanent resident aliens (front and back copy of resident alien card required)
- Non-permanent resident aliens - must be legally present in the U.S. with an acceptable visa type (E, G, H, L, NATO, O, TN-1, TN-2). Must have a history of visa renewals and minimum 2 years of employment history in U.S.
- All borrowers must have a valid social security number
- Maximum 4 borrowers on the loan
- Non occupant co-borrower is allowed
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| First Time Homebuyer | - First time homebuyer is defined as a borrower who has not had ownership interest in a property within the last three (3) years from the application date.
- Owner-occupied only
- Maximum 80% LTV/CLTV
- Maximum loan amount $2,000,000
- Interest only not allowed
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| Properties | - Eligible: Single family, PUD, Condo (Follow Agency guideline for review type), and 2-4 units
- Ineligible: Condo with litigation, Unwarrantable condo, Timeshare units, Manufactured, Mobile, Properties with income producing attributes, Mixed Use, Leasehold, Geodesic/Dome home, Condotel, Log Homes, Commercially zoned properties, Rural zoned properties, Properties with an oil and gas lease, Hawaii lava zone 1-2
- Max lot size is 20 acres. Property greater than 10 acres must have 3 comparable sales with similar acreage
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| Appraisal Requirements | - Appraisal report is always required, regardless of AUS result. Desktop appraisal is not allowed
- Age of report: 120 days from closing. 1004D is required after expiration
- 2 appraisals are required when loan amount is greater than $2MM
- When seller has taken title to the subject property within 90 days from the date of sales contract, LTV/CLTV is based on the lessor of prior sales price, current purchase price or current appraised value (Relocation loans are exempt)
- Desk review is ordered and reviewed by New Wave Underwriter, if UCDP score is greater than 2.5. If desk review is greater than 10% negative variance, the appraisal report is not acceptable. A CDA is not required for loans with 2 appraisals, regardless of the collateral underwriter score.
- Not allowed: Transfer appraisal, appraisal waiver, value acceptance + property data and hybrid appraisal
- FEMA declared disaster area: Re-inspection is required after incident end date by original appraiser to confirm no damage
- Declining trends will reduce Max LTV by 10% from matrix
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| Maximum Number of Financed Properties | Follow agency requirements |
| Housing Payment History | A minimum 24 months verified housing history is required with 0x30 payment history, however, living rent-free is okay with a satisfactory letter of explanation - For rental verification, a standard VOR completed by a professional management company or 24 months bank statements/canceled checks, and a lease agreement to document the term and payment are required
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| Age of Credit Documents | Follow Fannie Mae |
| Credit Requirements | - Must have at least 2 credit scores for each borrower. All 3 bureaus must be unfrozen
- Follow AUS and/or Fannie Mae guideline
- Any mortgage account has forbearance history on credit report, payment history must reflect 0x30x24 after existing forbearance
- Any delinquent credit history requires LOE from borrower
- All delinquent credit must be paid off. Collection and charge-off individually ≥ $1,000 collectively > $2,500 must be paid off
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| Derogatory Credit Event (Including NOD) | 7 years waiting period from application date. LOE is required to address the circumstances. (Foreclosure, notice of default (NOD), bankruptcy discharge or dismissal, short sale, deed in lieu of foreclosure or modification) |
| Occupancy | - Primary residence: At least one of the borrowers must occupy. Providing housing for parents or child is not allowed
- 2nd home: Must have reasonable distance from primary residence, Sch E reporting > 30 days rental income is ineligible
- Investment: Signed Business Purpose & Occupancy Affidavit is required for cash-out (Form is available on our website)
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| Employment and Income | Minimum 2 years employment history. Gaps over 30 days within 2 year requires LOE
Wage earner- Follow AUS except below
- Non-permanent resident aliens must have 2 years employment history in US, and 3 years of continuance of employment needs to be verified through VOE
- Commission/bonus income with less than a 2-year history may not be used for qualification
- Auto allowance is unacceptable as income
Self employed- Follow AUS except below
- An unaudited YTD P&L, no older than 60 days from the Note Date, most recent 3 months business bank statement, and Balance Sheet (In case an audited P&L is obtained, business bank statement is not required). Bank statements must support P&L
- If tax return for last year is not filed yet, 12 months P&L and balance sheet as of Dec 31(or end of fiscal year) is required
- P&L, Balance Sheet, and 3 month business bank statements are required for businesses that are not used for qualifying income (If unaudited YTD P&L is being used)
- PPP or any other type of SBA loans cannot be used as income or asset
- Verification of active business is required within 10 days prior to closing. It must be from 3rd party such as CPA, regulatory agency or applicable licensing bureau
Other Income- Follow AUS or Fannie Mae guideline
- Unacceptable Income: RSU income, income that is temporary, boarder income, virtual currency, retained earnings
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| Debts | - Follow AUS and/or Fannie Mae guideline
- HELOC must be paid off and closed unless it’s subordinated
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| Assets and Reserves | Follow AUS and COVID related agency requirements for source of funds, except for below.
- Gift of equity is not allowed
- Funds to close must be in U.S. financial institution. No funds to close from outside the U.S. are allowed.
Reserves (PITI for property x months) : Follow greater of AUS or below requirement- Loan amount ≤ $1MM: Follow AUS
- $2MM ≥ Loan amount > $1MM: 3 months
- $2.5MM ≥ Loan amount > $2MM: 12 months for Purchase & Rate/Term, 18 months for Cash-out
- $3MM ≥ Loan amount > $2.5MM: 18 months
- LTV/CLTV > 80%: 6 months
- Interest Only
- Loan amount
- $1MM - 12 months o Loan amount > $1MM - 24 months
- Business funds, HELOC, Gift funds, and cash-out from refinance are not acceptable source for reserves
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| Interested Party Contribution (IPC) | - Can only be used for closing costs and prepaid expenses, not down payment
- Maximum 9% if LTV ≤ 75%, Maximum 6% if LTV > 75% for primary residence and 2nd home. Maximum 2% for Investment
- Exceeding IPC after above use is considered as sales concessions, will be deducted from sale price to determine LTV
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| Compliance | All loans must be QM Safe Harbor. HPML is not allowed |
| Title Ownership | Individual, Joint Tenants, Inter-Vivos Revocable Trusts |
| Trust | - Must be Inter-Vivos revocable trust (a.k.a Living trust)
- Borrower(s) must be trustor, trustee and the primary beneficiary
- The trustee must have the power to do mortgage
- Illinois land trust is not eligible
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| Escrows & Title | - No impound required except when property is in flood zone
- Any existing tax or liens must be removed or paid in full through escrow
- Any item that will include a UCC associated with the property will be accepted as exception only (different loan limit, LTV,
- DTI, and reserves are required)
- Escrow holdback is not allowed
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| Power of Attorney | Follow Agency guideline |
| Purchase | - Personal property may not be included in the purchase agreement/sales contract. Personal property items should be deleted from the sales contract or reasonable value must be documented and the sales price must be adjusted
- Non arm’s length transactions are not eligible except below
- Sales between members of the same family. It must not be due to any adverse circumstances, seller’s mortgage rating is required
- Property seller acting as their own real estate agent, or borrower acting as their own real estate agent
- Borrower purchasing from their current landlord. Cancelled checks or bank statements required to verify satisfactory pay history
- Investment property must be arm’s length
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| Rate & Term | - Cash-back to borrower is limited to $2,000
- Principal reduction is permitted up to $2,500
- Payoff of a non-purchase second lien seasoned a minimum of 12 months from date of application. The second lien must not evidence draws exceeding $2,000 within the past 12 months and withdrawal activity must be documented with a transaction history of the line of credit
- Minimum of 6 months seasoning from the note date is required if previous refinance was cash-out debt consolidation of first and non-seasoned subordinate lien. Closing Disclosure for prior transaction is required
- Properties listed for sale are ineligible unless the listing was withdrawn (or expired) prior to the date of application
- For property purchased within 6 months prior to closing date, the LTV is lessor of appraised value or purchase price(Inherited property is exempt)
- Delayed financing in which the borrowers purchased the subject property for cash within 90 days from application is acceptable as rate and term. Cash back to the borrower in excess of the original purchase price or appraised value (whichever is less) is not allowed. If funds used to acquire the property was unsecured loan or a secured loan by an asset other than subject property, cash-out proceeds must pay off those loans
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| Cash-Out | - 6 months title seasoning from disbursement date is required
- If an existing first mortgage is being paid off through the transaction, it must be at least 12 months old at the time of refinance, as measured by the note date of the existing loan to the note date of the new loan. The requirements do not apply to any existing subordinate liens paid off through the transaction or when buying out a co-owner pursuant to a legal agreement.
- Properties listed for sale are ineligible unless the listing was withdrawn (or expired) prior to the date of application
- Payoff of a HERO lien is considered cash-out
- Not eligible for Texas 50(a)(6)
- For investment property cash-out, a borrower signed business purpose & occupancy affidavit is required. Proceeds used for any personal use are not eligible
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| Continuity of Obligation | Continuity of obligation must be met - At least one borrower obligated on the new loan was also a borrower obligated on the existing loan being refinanced
- The borrower has been on title for at least 12 months, residing in the property for the last 12 months and has either paid the mortgage for the last 12 months or can demonstrate a relationship (relative, domestic partner, etc.) with the current obligor
- The loan being refinanced and the title to the property are in the name of a natural person or a limited liability company (LLC) as long as the borrower owns at least 25% of the LLC prior to transfer. Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement
- The borrower has recently been legally awarded, the property (divorce, separation or dissolution of a domestic partnership)
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| Subordinate Financing | - Allowed up to maximum LTV, CLTV as per matrix
- CLTV must be calculated using the full line amount (highest limit) for any HELOC
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