Apply For a Traditional Loan

A Guide by Dylan Cleland and Lance Gebhart

Surfside Properties 🤝 Groves Capital

Application

Approval Timeline Expectations

Pre-Approval: Possible same-day/one business day with complete application, credit report, and documentation.

Full Approval: Typically 7-30 days, depending on choice of loan program, third-party providers, and timely document submissions.

Temporary Buydowns

Supercharge your qualifying loan with a lower rate immediately!

📊 Program Structure

1/0 Buydown: Interest rate reduced by 1% for the first year, then fixed for the remaining 29 years.

2/1 Buydown: Interest rate reduced by 2% for the first year and 1% for the second year, then fixed for the remaining 28 years.

💰 Your Advantages

Lower Monthly Payments: Reduce your payment in the first years while the market stabilizes, easing cash flow.

Refinance Flexibility: If you refinance before the rate adjusts, the remaining buydown savings are applied directly as a principal reduction — you never lose the benefit.

Market Leverage: Enjoy today’s lower payment while positioning yourself to refinance when rates drop.

🤝 Partner Benefits

Stronger Sales Tool: Makes listings more attractive for first-time buyers.

Market Advantage: Helps sellers and builders stand out by offering immediate payment relief.

Client-Friendly: Even if the borrower refinances early, unused savings are credited as principal reduction.

📋 Requirements

Funding

Details

Often paid by seller, builder, or realtor credit — ask your realtor if market concessions are available.
Calculator available: we’ll help determine whether a temporary buydown or permanent rate buydown is more cost-effective.
Especially valuable for builders and flippers, who can offer buyers below-market payments (1–2% lower) to move properties faster.

Qualification

Details

Standard documentation: tax returns for self-employed borrowers; paystubs and W-2s for wage earners.
Asset documentation required — all funds must be sourced or seasoned for down payment/reserves.
Gift funds and family equity contributions accepted.

Minimum FICO

Details

FHA Loans: 550+
VA Loans: 550+
Conventional & Non-QM/Alt-Doc: 620+
USDA Loans: 620+

💼 Compatibility & Notices

Loan Compatibility

Details

FHA Loans
VA Loans
USDA Loans
Conventional Loans
Select Non-QM, bank statement, P&L only, and WVOE-only programs

Important Notices

Details

Cannot be combined with down payment assistance programs.
Conventional loans require Automated Underwriting System (AUS) approval.
Government loans (FHA/VA/USDA) require AUS or manual underwriting.

Traditional Loan Programs

Program	Best for Whom	Program Description
Conventional (HomeReady, HomeStyle, Down Payment Assistance)	First-time buyers and wage earners with stable income. Works well for standard purchases, construction, and refinance loans. Requires DTI ≤50% across all liabilities. Not ideal for complex self-employed borrowers with multiple entities.	Full-documentation loan for higher-credit borrowers. Uses tax returns or paystubs for qualification. Can avoid mortgage insurance (MI) with 20% down. Allows up to 97% LTV, includes renovation and one-time close construction options, eligible for 1–4 unit homes, condos, townhomes, and even manufactured housing. Discounted MI rates available for first-time buyers under area median income limits. Must pass automated underwriting. Minimum 620 FICO.
FHA (203k, 203b, 203h)	Buyers with lower credit scores, limited savings, or past credit challenges. Allows 1-year income docs in some cases. Appraisal and property condition standards apply. Must pass automated underwriting.	Government-insured program offering lower rates and higher approval flexibility. Requires upfront and monthly mortgage insurance, sometimes for life of loan. Compatible with down payment assistance, renovation loans, and streamline refinances. Competitive 5/1 ARM options. Minimum 550 FICO, 48.9% housing ratio, 56.9% total DTI.
Alternative Documentation (Bank Statement, P&L, WVOE, 1099, No Income, DSCR)	Self-employed borrowers or business owners who write off most of their income on tax returns. Also suitable for investors who need flexibility or entity qualification.	Designed for clients who can’t qualify under standard full-doc rules. Accepts 12–24 months of bank statements, CPA-prepared profit & loss, written verification of employment (WVOE), or 1099s. No MI required. Higher down payment required (up to 40%). Works for all occupancy types. Minimum 620–680 FICO depending on program. Vacation/second home reserves required.
DSCR (Debt Service Coverage Ratio) / Investor Cash-Flow	Real estate investors, from first-time to experienced. Ideal for BRRRR strategy or portfolio growth. Can close quickly and allows borrowing under an LLC.	Qualifies based on rental income vs. mortgage payment. Minimum DSCR 1.25x for best rates (0.75x acceptable in most markets). No income or employment required. Allows long- and short-term rentals. No seasoning, no cap on cash-out. 85% LTV purchase, 70% LTV cash-out. Can include mixed-use properties. Minimum 620 FICO.
VA Loans (IRRRL, Cash-Out Type I & II, Purchase)	Eligible veterans and service members. Great for buyers with minimal cash-to-close, those seeking refinance, or leveraging long-term VA housing benefits.	VA-backed loans with no mortgage insurance. Funding fee waived if veteran has 10%+ disability rating. Extremely flexible guidelines, including residual income test instead of strict DTI. Can be used for purchases, refinances, and construction/renovation. Includes streamline IRRRL for fast refinancing.

Traditional Loan Programs Terminology

🛠️ ARV (After Repair Value)

Critical for determining maximum loan amounts in renovation and construction projects. Lenders typically limit loans to 65-75% of ARV for investment properties.

💰 LTC (Loan to Cost)

Used to calculate financing relative to total project cost. Hard money and bridge loans typically offer 85-90% LTC but must also satisfy ARV requirements.

📊 ICB (Initial Cost Basis)

Represents the complete investment including land acquisition and construction budget. Important for calculating tax basis and determining appropriate loan amounts.

📈 LTV (Loan to Value)

Standard metric across all loan types. Conventional loans offer up to 97% LTV for first-time buyers, while investment properties typically max at 80-85% LTV.

🔄 DSCR (Debt Service Coverage Ratio)

Essential for investment property qualification. Measures if rental income covers debt payments. Properties must typically achieve 1.0-1.25 DSCR depending on program.