CALIFORNIA FUNDING GUIDELINES

1.  Credit Score Requirement

– 680+ Credit Score First Time Investors:  90% Financing Purchase and Rehab Combined

– 600+ Credit Score First Time Investors:  85% Financing Purchase and Rehab Combined

– 600+ Credit Score With 1+ Completed Flips Last 24 Months:  90% Financing Purchase and Rehab Combined

2.  Qualifying Credit Criteria

No bankruptcies in past three (3) years

No foreclosures, short sales, or deed in lieu in past 2 years

Minimum of two (2) credit scores are required to reflect on credit report

2.1  Single Close – Rehab To Permanent 30 Year Loan Criteria

– Only one (1) closing for the initial purchase and the conversion to permanent 30 year loan.

–  Minimum 620+ middle credit score required.  Soft credit pull is done at time of conversion to permanent 30 year loan to verify credit score is minimum 620+.

– Must have a verifiable prior mortgage history (primary residence OR rental property)

– Cash out option available “after” rehab is 100% complete.  Based on property debt service and appraisal.

– Initial ARV appraisal will include 1007 rental schedule for projected rents.  Appraiser will re-certify appraisal at time of conversion to 30 year loan.

– 1% origination fee (or minimum $1,000.00) at time of conversion to permanent 30 year loan.  If borrower chooses not take the permanent loan after rehab is done there will be a .50% point exit fee.

– Interest Rates:  Borrower will be provided a rate table prior to closing on the rehab loan which will detail the expected interest rate at time of conversion to permanent 30 year loan.

3.  Liquid Cash Assets Required For Funding Approval

To qualify for funding approval, you must provide financial bank statements that reflect liquid assets that covers the following specific transaction related items:

– Down payment requirement amount.

– Lender loan origination fee and applicable closing cost.

– 10% of the total rehab budget is required to be documented as “liquid reserves contingency”.  This is not a cost to be paid at closing.

– Six months (6) of reserve monthly interest payments.  This is not a cost to be paid at closing.

Stocks, bonds, mutual funds, retirements accounts are reduced to 50% of value for calculating verification of assets.

Any LARGE DEPOSITS will be required to document the source of deposit(s).

Borrower must show a minimum of $15,000.00 in cash liquid assets to qualify for funding approval regardless of the amount of total assets. $15,000.00 must be in liquid cash in on demand account (checking, savings, money market).

4.  Loan Origination Fees

2.75% of total loan amount OR $3,800.00 (whichever is greater)

5.  Other Lenders Fees

Processing Fee:  $995.00

6.  Maximum “Loan To Cost” (LTC) & Interest Rate Based On Number Of Prior Completed Fix & Flips Last 24 Months

Level 1:  0 flips**          12% interest rate         90% LTC         *70% ARV (optional 75%*)

Level 2:  1-4 flips           11% interest rate         90% LTC        *70% ARV  (optional 75%*)

Level 3:  5+ flips           9.99% interest rate       90% LTC         *70% ARV  (optional 75%*)

*Up to 75% ARV with .50% added to interest rate

**0 flips with less than 680+ credit = 85% LTC and 65% ARV)

**Loan To Cost (LTC) = total loan amount as a percentage of purchase price and rehab cost combined.

QUALIFYING FLIP DEFINITION:  Completed flips are defined as residential investment properties that were acquired within the last 24 months AND renovated and sold within 12 months of acquisition. 

7.  Required Documentation  –  See bottom of this page for list of required documents

8.  Qualifying Types Of Properties

Single Family residences and 2-4 units.  Non owner-occupied only.  No primary residence or vacation homes.  No condo’s.

9.  Purchase And Rehab Funding Program

We can fund up to 90% of the combined purchase price and rehab budget in one loan not to exceed 75% of the After Repair Value (ARV).

Funding Scenario Example:

Purchase price         $150,000.00

Rehab budget           $  60,000.00

Total project cost:    $210.000.00

                                        X   90%  Loan To Cost (LTC)

Loan Amount:        $189,000.00

Down Payment:     $  21,000.00  (total project cost minus loan amount)

Plus lender fees and closing cost

Borrower is responsible for down payment of total project cost, plus lenders fees and closing cost.

IMPORTANT NOTES:  

Foreign nationals require minimum 20% to 30% down payment

10.  All Transactions Must Close In A Business Entity Name

Funding can only be approved in a business entity name.  There is no seasoning requirement on the age of the business entity.  Entities include:  LLC, LLP, S-Corp, C-Corp.

11.  Proof Of Funds To Close 

Minimum $15,000.00 In Liquid Checking/Savings Account Required For Funding Approval! 

You must clearly document that you have the funds to close, which includes; down-payment, lender fees and closing cost.  Loan files are not submitted for underwriting approval without proof of funds to close.

12.  Days To Close

On average we can close in about 12 business days from the time we receive ALL REQUIRED DOCUMENTATION.  Delays in closing are normally due to appraisal/property value, title issues, etc.

13.  Minimum And Maximum Loan Amounts

–  Minimum loan amount is $50,000.00.  Maximum loan amount is $5,000,000.00.  Exceptions allowed on case by case basis.  

14.  Full Property Appraisal Required 

A traditional full property appraisal is ALWAYS required to underwrite and fund a investor loan for this product.  We will order an expedited appraisal at time of submission of loan file for underwriting approval.  Cost of appraisals vary based on geographical market.  If loan amount is $1million+, two (2) property appraisals will be required.

15.  No Verification Of Income Required

No verification or documentation of personal or business income is required. Borrower will have to produce copy of of last years personal tax return to document that income taxes are being paid.  Income is NOT used as bases for qualifying.

16.  Property Type

Single family residences and 2-4 residential units.  No condo’s.

17.  Transaction Type

Fix & Flip (purchase and rehab) transactions only.

18.  Interest Rates

Interest rates range on average from 9.99% to 12% depending on credit score and number of prior completed fix and flip transactions within last 24 months. See guidelines above.

19.  Seller Concessions / Seller Paid Closing Cost / Assignment Fees

Seller may contribute up to 3% of the agreed purchase price towards buyer closing cost expenses or concessions in the contract to purchase.

The maximum Assignment Fee is 3% of the contract purchase price.

20.  Subordinate Financing

Subordinate financing is NOT allowed, which includes 2nd mortgages and seller held financing.

21.  Loan Term

13 months

22.  Rate Type

Fixed interest only monthly payment.

23.  Prepayment Penalty

None.

24.  Required Documentation

Must close in the name of a business entity

__ Clear and legible copy of drivers license (all members of business entity)

__ Purchase and sales agreement

__ Last 2 month’s business bank statements and/or personal bank statements (must include all pages)

__ Articles Of Organization for LLC Or Articles Of Incorporation for a Corporation

__ Operating Agreement or Corporate Charter/Bylaws

__ Certificate Of Good Standing (Issued By Secretary Of State within last 30 days)

__ Scope Of Repair Work (We provide required template for renovation scope of work)