Mortgage flip rules - Why qualifying income & 640 score are not enough

Mortgage flip rules do not need to nix any sales! Just make sure you verify the lender's rules and be prepared for some additional processing requirements. See below. /// Qualifying income and a 640 score are no longer enough. I actually think it's good news. See below. /// Make it a good week folks! - Paul

Mortgage rules for flips
Flipping rules apply when the seller acquired the property in the last 12 months. Double or concurrent closes are not allowed. The owner must be the seller. For a quick flip financing quote go here.

There are industry standards, and lenders add their own unique requirements. Verify the property qualifies with the buyer's lender before accepting an offer! (Additional appraisal, inspection, verification, documentation requirements always apply). Better yet, call me to make sure it all goes smoothly. There are too many preventable (late stage) declines out there

Flip rule at Prospect Mortgage
In practical terms we only have one(!) limiting rule: Conventional loan maximum qualifying property value: (Purchase price+30%)+cost of repairs. 
 
640 score and qualifying income not enough
A 640 score and 2 years qualifying income by themselves are not enough. You now also need (documented) confirming, compensating, and enhancing elements. Some examples are listed below. I actually like this for two reasons:
1. It is ultimately a first a first step to more common sense lending.
2. I can enhance an applicant's profile with measurable impact! 

- No payment shock (Significant increase in housing payments)
- Reserves
- Rental history without lates
- Savings rate
- Accounts with 5+ year history
- More than minimum down payment
- Installment debt without lates
- Mortgage debt without lates
- Credit card debt without lates
- Major (past) derogatories like repos, write-offs, collections, etc.
- Home buyer course
- Stability of employment
- Likely professional advancement
- No gifts
- Low debt to income ratio
- High credit score
- No bankruptcy, foreclosure, loan modification
- More than minimum down payment
- Additional income, not used as qualifying income 

Contact me

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"Anticipate the difficult by managing the easy"
Lao Tzu