Stated Non Conforming Commercial Real Estate Mortgage
traditional Conforming Commercial Mortgages
All borrowers want the best rates and lowest cost to finance their commercial mortgage character. however most borrowers do not qualify. With a Stated Non Conforming Commercial Mortgage many borrowers who otherwise could not qualify for financing are now able to.
traditional loans require tax returns for the past two to three years to verify income and expenses. They require bank statements for the last two to three months to source and season down payment and reserves. traditional loans generally require higher credit scores and years of experience owning and managing similar commercial character types. And traditional financing takes much longer to close.
Stated Non Conforming Commercial Mortgages
For more lenient underwriting and quicker closing you may want to choose a Stated Commercial Mortgage. Though the rate may be higher many commercial real estate investors and small business owners will do better with this kind of financing for many reasons.
First the lender generally does not require tax returns. This helps the borrower to truly qualify based on the income generated by the character. If it is a good investment and the character can service the debt and meet the minimum debt service coverage ratios the loan qualifies.
The Stated program does not require funds to be seasoned. They only require funds to be sourced. For traditional financing the funds must be seasoned for two to three months or longer. This requirement also helps many borrowers to qualify for the Non Conforming program.
Many traditional lenders require a 680 FICO score. Some already require 700 or higher. Not only do they require the high FICO they also require years of experience owning or managing a similar character kind. For an agency loan (FNMA, FHLMC, FHA, etc.) You must have if you want to buy and finance a 12 unit character having owned only 1-4 unit similarities would not help you to qualify. They may require you to pay for an experienced character manager to get their loan.
The average traditional commercial loans take 60 days to close. This is already longer for agency loans that can take 90 days or longer to fund. however, with the Stated Income program the loan closes in 2 to 4 weeks.
But maybe the most important reason to do a stated non conforming commercial mortgage is because they may be too small. Many traditional lenders will not finance loans under $500,000 or maybe already $250,000. The agency lenders require their loans to be at the minimum $1,000,000 to $2,000,000. The minimum loan for the Stated Income program is $50,000.
There are many reasons to choose the Stated Non Conforming Commercial Real Estate Financing program. None of those reasons are because they offer better rates or terms than a conforming loan. consequently, check with your conforming lender before choosing this program. If you work with a mortgage broker, they should know right off if you would qualify for the conforming program.