A non-conforming loan is a loan that fails to meet bank criteria for funding. There are two types of non-conforming loans – soft money loans (also referred to as “just missed” bank loans) and hard money loans.
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Unconventional (Non-Conforming) Loans
In addition, some borrowers don’t have the time for credit committees or for the long list of required documentation.
The tight lending guidelines prevalent in today’s market and the banks’ predisposition to only lend to the most creditworthy of clients has allowed non-bank lenders to enter the market and lend to these “un-bankable” clients. These lenders want to know more than just the credit scores. They want to know the “story” behind the loan request.
Reasons for not meeting a bank’s loan criteria include :
Loan amount is outside of bank’s lending parameters (either too low or too high)
Lack of sufficient credit
Unorthodox nature of the use of funds
Property type
Property location
Property condition
Short timeframe to close (funds needed quickly)
Soft Money Loans
As mentioned above, these are loans that fall just outside of conventional bank guidelines. The credit score might be below acceptable levels or the borrower’s liquidity is not high enough. Whatever the reason might be, borrowers can use these programs to obtain financing that might not otherwise be available.
Below you’ll find a summary of the lending guidelines for two of our “soft money” loan programs. Feel free to contact us and tell us your story.
| SOFT MONEY LOAN GUIDELINES – PROGRAM #1 | |
| Property Types | Multifamily 5+ units
Mixed use Office, Retail, Light Industrial, Self-Storage, Mobile Home Parks |
| Loan Amount | $250,000 – $3,000,000 |
| Amortization | 30 year fully amortized loans
5, 7 and 10 year fixed rates turning into an ARM for the remaining term |
| Occupancy | Investor & Owner-Occupied |
| Lending Area | Nationwide metro areas – 100,000+ population |
| Maximum LTV | Multifamily 70%
Other Properties – 65% |
| Credit Score | Prefer 650+
Down to 550 with strong cash-flowing property |
| Credit Profile | No bankruptcies, foreclosures in last 2 years
No subject property mortgage lates in last 12 months |
| Foreign Nationals | Max 60% LTV on refinances
Max 65% LTV on purchases |
| Documents Required | Commercial loan application (in forms section)
Last two years and YTD P&L Statement Current rent roll Three months bank statements |
| SOFT MONEY LOAN GUIDELINES – PROGRAM #2 | |
| Property Types | Multifamily (5-25 units) Mixed use
Office, Retail, Light Industrial, Self-Storage, Mobile Home Parks, Motels/Hotels, Garage/Auto repair |
| Loan Amount | $100,000 – $1,000,000 – Based on credit and property type |
| Amortization | Fully amortized loans up to 25 years
Fixed rate for the first 5 years |
| Occupancy | Investor & Owner-Occupied |
| Lending Area | Nationwide metro areas – 100,000+ population |
| Maximum LTV | Up to 70% – Based on various factors
· Investment vs Owner-Occupied · Property type · Credit profile |
| Credit Score | A – D credit
A – 650 minimum credit score D – 500 minimum credit score |
| Credit Profile | A – D credit profiles. No open bankruptcy.
Some credit grades allow open collections and mortgage lates. Call us for specifics. |
| Documents Required | Commercial loan application (in forms section)
Last two years and YTD P&L Statement Current rent roll Three months bank statements |
Hard Money Loans
If a loan does not meet bank guidelines and cannot be funded through one of our soft money programs, we also have hard money programs through our hard money lenders.
Hard money lenders do not rely on the creditworthiness of the borrower. Instead, they look at the value of the property. The lender wants to make sure that if the borrower defaults, there will be sufficient equity in the property over and above the amount of the loan. Accordingly, you will not get a hard money loan above 65-70% of the value of the property. These loans are usually short term (12-24 months) and require that an exit strategy be in place.
| HARD MONEY LOAN GUIDELINES | |
| Property Types | Multifamily, Mixed use, Office, Retail, Light Industrial, Self-Storage, Mobile Home Parks.
Construction programs available. |
| Loan Amount | $500,000 – $10,000,000 |
| Amortization | Interest only
12-36 months |
| Occupancy | Investor & Owner-Occupied |
| Lending Area | Nationwide metro areas |
| Maximum LTV | Up to 70% – Based on property type, location and exit strategy. |
| Exit Strategy | A plausible exit strategy must be in place. |
| Credit Score | Not important. Some programs carry minimal credit score requirements. |
| Credit Profile | No open bankruptcy.
Explanation needed for credit issues. Call us for more info. |
| Documents Required | Commercial loan application (in forms section)
Prior year’s and YTD P&L Statement Current rent roll |