Can Non-Permanent Resident Aliens Get Mortgage Loans with Profit and Loss Account
Can Non-Permanent Resident Aliens Get Mortgage Loans with Profit and Loss Account?
Non-Permanent Resident Aliens (NPRAs) are generally eligible for Non-QM programs that offer Alt Doc options, including the P&L Statement Only product, provided they meet strict residency, income calculation, and credit overlays.
Eligibility of Non-Permanent Resident Aliens (NPRAs)
The borrower must satisfy core U.S. residency and status documentation requirements to be considered eligible for any Alt Doc Non-QM loan:
- Eligible Status: Non-Permanent Resident Aliens are defined as non-U.S. citizens who are lawfully accorded the privilege of residing temporarily in the United States and must document valid employment authorization.
- Accepted Visa Classifications: Eligible visa classifications typically include E, G, H, L, O, P, and TN.
- Ineligible Status: ITIN borrowers, Asylee status, and Foreign Nationals (defined as those who primarily live and work outside the U.S.) are often ineligible for non-DSCR programs.
- Residency and Employment History: NPRAs must have been living and working in the U.S. for at least two years.
- Required Identification: The borrower must possess a valid Social Security Number (SSN) and have an established U.S. credit history.
- Visa Expiration: If the visa will expire within six (6) months of the loan application or note date, we may require a letter from the employer documenting the borrower’s continued employment and continued visa renewal sponsorship.
- Co-Borrowers: If a non-U.S. citizen is borrowing with a U.S. citizen, the visa or other residency requirements for the non-U.S. citizen do not eliminate the NPRA requirements.
P&L Statement Documentation Requirements
Since the P&L Statement Only program is designed exclusively for self-employed individuals, the NPRA must meet the following documentation rules regarding their business income:
- Self-Employment Requirement: The borrower must be self-employed with a minimum ownership interest of 25% or more in the business.
- Business History: The borrower must document that they have been self-employed for at least two years in the current business to qualify for the P&L program.
- Third-Party Preparation: The P&L statement must be prepared by a qualified third party, such as an independent Certified Public Accountant (CPA), Enrolled Agent (EA), or CTEC registered tax preparer (PTIN).
- Tax Return Provision: Borrowers must not provide their tax returns for the P&L Statement Only product; otherwise, the loan will be underwritten as Full Documentation. Separately, the CPA/EA/CTEC preparing the P&L must attest to having prepared the borrower’s most recent personal/business tax returns.
- Calculation: The qualifying income is the monthly net income from the P&L divided by the number of months covered by the P&L, multiplied by the borrower’s ownership percentage.
Financial and Transactional Limitations
The combination of Non-Permanent Resident status and Alternative Documentation often results in tighter restrictions on the loan structure:
- Minimum FICO Score: The P&L Statement Only loans typically require a minimum 700 FICO score for all borrowers, as seen in the CMG Connect and CMG Horizon programs.
- Maximum Loan-to-Value (LTV): NPRA borrowers using Alt Doc are restricted to lower LTV caps compared to U.S. citizens.
- For Alt Doc programs generally, the maximum LTV for NPRAs is 80%.
- For the specific P&L Statement Only program under CMG Connect, the loan is limited to 75% maximum LTV.
- Transaction Eligibility: NPRAs are strictly limited in the types of transactions they can execute.
- Eligible: Purchase and Rate-Term Refinance transactions only.
- Ineligible: Cash-Out Refinances are not eligible for Non-Permanent Resident Aliens.
- Geographic Restrictions: Under CMG Horizon guidelines, Non-Permanent Resident Aliens from the Peoples Republic of China are ineligible for financing in Florida.
- Escrow Requirement: For Foreign National borrowers, escrows/impounds are mandatory. While NPRAs are defined separately from Foreign Nationals, this highlights a focus on mandatory escrows for non-citizens.
Summary of Mortgage Loan Product Type
The P&L mortgage loan is a type of Non-QM loan that provides a valuable option for creditworthy borrowers, including self-employed individuals, who cannot secure financing through government-sponsored enterprises (GSEs). Although Non-QM loans carry a higher interest rate to offset the layered risk of limited documentation, they still satisfy the federal Ability-to-Repay (ATR) rule by using the P&L statement to assess the borrower’s capacity to repay the mortgage debt.
FAQ's
Yes, Non-Permanent Resident Aliens are generally eligible for financing under Non-QM programs that accept Alternative Documentation (Alt Doc), such as those offered by our our Advantage, our Horizon, our Prime, and Nations Direct Mortgage.
P&L Statement Only loans under our Connect guidelines are limited to a maximum LTV of 75%.
Yes, if a non-U.S. citizen is borrowing with a U.S. citizen, the NPRA requirements (such as visa or residency documentation) do not eliminate the standard requirements for non-U.S. citizens.
All funds required for down payment, closing costs, and reserves for Non-Permanent Resident Alien transactions with a valid SSN must be seasoned for 30 days.
They must have a valid Social Security Number(s) and have an established U.S. credit history.
If the visa will expire within six months of the note date, a letter from the employer documenting the borrower’s continued employment and continued visa renewal sponsorship is acceptable.
The borrower must provide copies of their valid passport and unexpired VISA. Acceptable alternatives include an I-797 form (Notice of Action) with valid extension dates and an I-94 form (Arrival/Departure Record).
Non-Permanent Resident Aliens are eligible for Purchase and Rate-Term Refinance transactions only; Cash-Out Refinances are not eligible.
The Profit & Loss (P&L) Statement Only documentation option requires a minimum 700 FICO score.
The borrower must generally have a minimum of two years legal residency and employment in the U.S..
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