Self-employed investors, full-time flippers and investors whose income runs through several companies often struggle with lenders who want two years of tax returns. A bridge loan made to an LLC for an investment property does not work that way. The loan is repaid from the sale or the refinance of the property, so the property and the plan are what the lender studies.
That is what asset-based underwriting means. It is not a no-documentation loan: the file is different, not empty.
What is and is not verified
| Item | Verified? | Why |
|---|---|---|
| Personal tax returns and pay stubs | Generally not | Repayment comes from the property's sale or refinance, not your salary |
| Property value | Yes, by appraisal | It sets the loan amount (up to 80% LTV on a purchase) |
| Exit plan | Yes | The lender needs to see how the loan is repaid within 12 months |
| Liquidity | Yes, bank statements | Cash for the equity, closing costs and carrying the loan |
| Experience | Yes, track record | Completed deals of similar size improve terms |
| Credit | Reviewed for US borrowers | Foreign nationals with no US history are not penalized for it |
| Identity and LLC ownership | Yes | KYC and anti-money-laundering rules |
Why business purpose matters
The federal ability-to-repay rule (Regulation Z, 12 CFR 1026.43) applies to consumer credit secured by a dwelling, and Regulation Z exempts credit extended primarily for a business purpose (12 CFR 1026.3). A loan to an LLC for a non-owner-occupied investment property is business-purpose credit, outside that framework, which is why lenders can underwrite it on the asset. The same rule sets the limit: if you or your family live in the property, it is consumer credit, and income will be verified.
Lenders document the business purpose at closing, usually with a signed business-purpose and non-owner-occupancy declaration. Signing one for a property you intend to live in is a serious misrepresentation.
What makes a strong file without income documents
- Equity: the more of your own money in the deal, the less the lender relies on anything else
- A credible exit, with comparable sales for a flip or market rents for a refinance
- Experience: a list of past projects with addresses, dates and results
- Reserves: cash beyond closing to cover interest and overruns
- A clean entity: LLC formed, in good standing, with an EIN and a bank account
Terms
Passy Capital's bridge loans run up to 80% LTV on a purchase and 75% on a cash-out, 12 months interest-only, typically 8% to 12%, from $1M to $5M, with a 1% to 2% fee at closing and no upfront fees. Term sheet in 24 to 48 hours, closing in about two weeks on a clean file. See bridge loans.
For the long hold, a DSCR loan also qualifies on the property rather than on personal income; it is underwritten on the rent. See DSCR loans and how DSCR qualification works.
Who this suits
- Self-employed investors whose tax returns show low income after deductions
- Full-time flippers and builders whose income arrives irregularly, deal by deal
- Investors who hold each property in a separate LLC and do not want to consolidate their finances for every loan
- Foreign investors with no US income or US tax returns at all
- Investors moving quickly on a purchase, who cannot wait for a lender to read two years of personal returns before the contract deadline