Getting a Mortgage on Low Salary but Big Savings?

[Jim Horne]

Need your help BP team!!  My sister-in-law brough me a problem I'm having a really hard time figuring out.  Here's the deal:

- She owns a small disaster recovery services business and has a newly awarded contract with FEMA

- She pays herself a fairly low salary from the contract because it's all she needs, so from the bank's perspective she has low income

- She has a huge cash savings stockpiled and which she is building (she just started this business) in order to make payroll in periods where FEMA contract disbursements are slow

- She's preparing to place an offer on a multi-family she currently lives in and rents from; she could pay cash for the property from her small business savings but needs to save that cash for the above mentioned reason

- She's called multiple banks but can't find one willing to lend due to her "low DTI ratio"

I think she just hasn't found the right lender and is probably calling big box banks looking for conforming loan terms.  Thoughts?  Does she just need to find the right private, portfolio or investment-oriented lender?  What's the best way to find the right kind of lender for this situation?

[Stephanie P.]

@Jim Horne

While I respect all of the guys on this thread, I think they missed your point and question.

Your sister in law needs a bank statement loan for self employed borrowers for an owner occupied property.  It's a loan where the income is based on her last 12-24 months deposits.

Even if she pays down some of her debt, it could be that she pays herself such a low salary that the property itself blows up her DTI (even while counting 75% of the rents).

QM stands for Qualified Mortgage.  Dodd/Frank legislation gave us that distinction.  A non-qm loan doesn't fit the parameters of a qualified mortgage.  I linked to it for your reading pleasure.

Best of luck

Stephanie