New single-close loan product seeks to fill demand for non-traditional construction financing
GO Mortgage has debuted a non-QM construction loan program designed for borrowers who do not qualify for new construction financing through standard income qualifications.
According to its release, the new single-close loan can be used to finance up to 90% of a borrower’s home construction for loans up to $2 million. Instead of traditional income requirements, self-employed borrowers and real estate investors can provide 12 to 24 months of bank statements or on a debt service credit ratio (DSCR) basis using the expected rents on an investment property to qualify for the non-QM loan program.
GO Mortgage CEO Michael Isaacs said the program is one of the first of its kind in the industry and aims to help alleviate the nation’s shortage of housing inventory.
“Too often, our loan officers were encountering clients who could afford to build but do not qualify through conventional means or were discouraged by the complicated nature of construction lending,” said Isaacs. “Our new program solves both of these issues so that any self-employed borrower, business owner or private investor can achieve their homebuilding goals and isn’t left standing on the sidelines.”
The new product can be used for primary residences, second homes or investment properties, including duplexes, non-warrantable condos and manufactured housing. While the program allows as little as a 10% down payment toward new home costs, borrowers can qualify for 80% financing and pay no mortgage insurance with a minimum 680 FICO score. Those with a 720 score or higher are eligible for up to 85% LTV and pay no mortgage insurance.
The company further explained that it would provide financing at an interest-only rate during the construction phase. After construction is complete, borrowers do not have to refinance their construction loan into a permanent loan. This helps them avoid a second closing, which is typical of most construction loan products. The program allows a maximum build time of 24 months. Borrowers can lock their permanent loan rate within 60 days of the construction’s completion.
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“Our mantra is no loan left behind,” Isaacs said. “It’s demoralizing to miss any opportunity to help someone achieve their homeownership goals, so our job is to make sure we have every product under the sun that a client may need. And when borrowers can’t find the financing they’re looking for, we’ll create it for them.”
