Minimum Required Time in Business for Non-QM Programs

The Horizon Non-QM series allows self-employment history of 18+ months if the borrower has 3+ years prior experience in the same line of business.

If a self-employed Bank Statement borrower has less than 2 years (but no less than 1 year) of history, an additional 6 months PITIA reserves is required over and above the standard loan amount requirements.

For certain Alt Doc programs, verification of the business existence and that the business is fully operational/active is required within ten (10) calendar days of closing.

Verification of the borrower’s business existence and operation must occur within 30 calendar days prior to the note date. A Verbal Verification of Employment (VVOE) for self-employed borrowers is also required within 30 days of the Note Date.

Generally, income from self-employment that is less than one year is not considered effective income. Additionally, a borrower who recently converted from a W-2 to a 1099 and does not yet have filed tax returns available is not eligible under some Non-QM products.

If the borrower transitioned from a W-2 role to a 1099 role with a different company, they must be in their current position for at least one (1) year. If the transition was with the same employer, they must have been with that employer for at least 2 years.

Validation of the business’s existence (minimum of 2 years) must be provided through documentation such as a Business License, a Letter from a Tax Preparer or CPA, a Secretary of State filing, or confirmation from a regulatory or state agency.

Less than two years of self-employment history may be considered if the borrower can document a minimum of two years employment history in the same line of work or a related profession. Some programs allow for training or education in the same field as an acceptable substitute for less than two years’ experience.

Yes. Self-employed borrowers in a licensed profession (e.g., Medical, Legal, Accounting) can be considered from a business that has existed for less than two years, but greater than one (1) year, provided they have at least two (2) years of documented previous experience in the same field or evidence of formal education in a related field.

The standard minimum requirement for most Non-QM products, including Full Documentation (Full Doc), Alt Doc, Bank Statement, and P&L Statement Only programs, is that the borrower must have been self-employed for two or more years in the same business.