• Credit scoring
• Reserves
• Income and debt ratios
• Income qualifications

Most loan programs have strict credit score requirements. A strong credit score generally allows for a higher loan-to-value ("LTV") and a lower interest rate. Generally, a borrower will have three credit scores, one from each of the three credit reporting agencies. Scores are based on a number of factors such as timely payments, the amount of outstanding debt in relation to open credit lines and the number of recent inquiries made to your credit report.

A lender generally requires two months of reserves for primary homes and six months on investment properties from a borrower in order to approve a loan. Reserves are the monthly principal and interest payments and taxes and insurance on the subject property. Liquid or near-liquid assets that can be used to calculate reserves include cash in savings and checking accounts, IRA and 401(K) accounts or stock and bond investment accounts.

Income compared to debt is the analysis a lender uses to calculate ratios. Ratio criteria can vary from lender to lender.

How the borrower earns and/or reports income dictates the type of loan program that a borrower can qualify for. The following four loan programs are available through First Mortgage Solutions.

Full Documentation. The traditional loan program for the borrower who has been employed in the same line of work for at least two years and income is verifiable via tax returns and earnings statements such as pay stubs, W-2's or 1099's.

Stated Income. Income is verifiable through bank deposits from the borrower's bank statements and the borrower has been employed in the same line of work for at least two years. This program works well for self-employed borrowers.

No Ratio. This loan program does not involve income or earnings and the borrower has been employed in the same line of work for at least two years. This loan program works well for the borrower with strong credit scores and who does not have enough income to qualify otherwise.

No Documentation. This loan program works well for the borrower who recently changed careers and has strong credit scores.

Peter Berk - Sean Trombetti - Mark Widerberg
Georgia Residential Mortgage Licensee Rates and Terms subject to change without notice.