How do Option 2 loans differ from conforming loans?
Simply put, the major difference lies in the flexibility of the guidelines. For instance, standard conventional guidelines call for your housing debt to be limited to 28% of your gross income and your total debt (including your home) not to exceed 36% or your gross income. These calculations are referred to as your debt-to-income ratios. With an Option 2 mortgage, there is only one ratio calculation – total debt. This means that if you have little debt other than your home that you may be able to purchase more of a home than you otherwise would have thought possible. Another restriction in conforming loans call for 2 years of self employment or continued employment whereas some non-conforming mortgages look for 1 year or may not even ask if you are employed at all. Our lenders’ job is to examine your specific requirements and find the particular mortgage product that best suits your needs.
