Non-Prime Product Primary and Second Home Guideline Updates
Effective for Non-Prime Primary Residence and Second Home loans with applications taken on and after Monday, April 2, 2018, Carrington Mortgage Services, LLC (CMS) will introduce the following guideline enhancements:
- New Credit Grades – Non-Prime Program revised to Credit Grades A, B, and C (formerly grades A-, B+, B and RHE). See CMS Non-Prime Matrix for complete LTV and credit score details.
- Cash Out Limits – Non-Prime standard cash-out limit has been increased to $500,000 (previously $250,000) with no LTV reduction required.
- Expanded Debt to Income (DTI) – Expanded DTI available for A and B up to 50% with minimum FICO of 620. Expanded DTI available for A and B up to 55% with minimum FICO of 680
- Mortgage and Payment Verification – Credit Grade A housing history – 0 x 60 x 12 (previously 1 x 30 x 12) for Purchase and Rate/Term Refis with 620 FICO up to 85% LTV. See CMS Non-Prime Matrix for complete Non-Prime housing history requirements.
- Enhanced Ratios – Removed the 40% Maximum Housing Ratio requirements
- Calculating Qualifying Income – Updated income calculations for the Business Bank Statement Program. Option 1 can now be a Borrower prepared P&L. Additionally, the variance on bank statements vs. P&L has increased to 10% (previously 5%).
Note: This applies to Investment Bank Statement program as well.
In addition to the enhancements above, the Non-Prime program will have the following additional guideline changes:
- First Time Homebuyer and Second Homes – Minimum credit score increased to 580 from 560.
- Maximum Loan Amounts – loan amounts greater than $1MM available only to credit grades A and B
All loans with APPLICATIONS on and after Monday April 2, 2018 must comply with the new Non-Prime Underwriting Guidelines. All loans with Applications prior to Monday April 2, 2018 must be fulfilled using the prior Non-Prime Underwriting Guidelines.