Not all borrowers have a traditional income stream, but that doesn’t mean homeownership or property investment should be out of reach. First Ohio Home Finance’s alternative income mortgage product is designed to assist individuals who may not meet the typical income verification requirements for conventional loans. Whether you’re self-employed, a real estate investor, or have other non-traditional income sources, we offer flexible mortgage solutions that work for you.

Also known as a non-traditional or non-qualified mortgage (non-QM), an alternative income mortgage allows borrowers to qualify for a home loan using non-traditional income verification methods. Unlike conventional loans which require proof of consistent income through W-2s and pay stubs, alternative income mortgages rely on different documentation to demonstrate your ability to repay the loan.

These loans are perfect for those whose income may fluctuate, who have multiple income streams, or who simply don’t have the traditional financial paperwork but can still meet the repayment requirements.

This loan product is useful for borrowers in a variety of circumstances, including:

• Self-employed individuals: Freelancers, entrepreneurs, and small business owners often face difficulty qualifying for traditional loans due to irregular income or lack of traditional employment documentation. An alternative income mortgage lets you qualify using other methods, like bank statements or profit and loss statements.
• Real estate investors: If you’re purchasing investment properties but lack consistent income through traditional employment, these loans can help you qualify based on your rental income or asset reserves.
• Gig economy workers: If you’re working in fields like ridesharing, freelancing, or other gig-based employment, your income may not be consistent month to month. An alternative income mortgage allows for more flexible evaluation of your overall financial picture.
• Retirees or those with significant assets: Even if you aren’t earning a steady paycheck, you may have significant assets in the form of investments, savings, or other liquid assets that can help you qualify for this type of mortgage.
• Foreign nationals: If you don’t have a U.S. credit history but can show proof of income or assets, alternative income mortgages may be an excellent option.

This loan product is available for both investment properties and primary residences, offering flexibility for individuals looking to purchase their next home or expand their real estate portfolio.

While alternative income mortgages provide flexibility, there are still specific eligibility requirements you’ll need to meet. Borrowers seeking this type of loan commonly provide documentation such as:

• Bank statements: For self-employed borrowers or those with fluctuating income, 12-24 months of personal or business bank statements may be required to verify cash flow.
• Profit and loss statements: Business owners can provide profit and loss statements to demonstrate their financial health over a specified period.
• Asset reserves: For those who may not have regular income but have substantial liquid assets, asset depletion strategies may be used to determine how much of those assets can be used to repay the loan.
• 1099 forms: Independent contractors or freelancers may qualify by providing 1099 forms that show their earnings over the past year or more.
• Rental income: For real estate investors, proof of rental income from other properties can be used to meet income requirements.
• Credit score: While alternative income mortgages may have more lenient credit score requirements, a borrower’s credit score is still reviewed during the application process.
• Debt-to-income ratio (DTI): Your overall financial picture will be assessed to ensure your DTI remains within acceptable limits (typically below 50%).

Once you’re approved for an alternative income mortgage, the process is similar to that of a traditional loan. You’ll work with our experienced team to finalize the details of your loan, lock in your interest rate, and complete the closing process.

If you’re a non-traditional borrower looking for a mortgage solution that fits your needs, we’re here to help. At First Ohio Home Finance, we’ll work with you to evaluate your financial situation and find the best loan options available. Use the contact form below to learn more about our alternative income mortgages and start your journey toward homeownership or investment success!