‘We expect the program to be an incredibly popular option for well-informed borrowers, and in turn, a significant boom for mortgage originators,’ says Mat Ishbia, CEO of UWM, in a release. ‘The purpose of the program is not to enable a consumer to afford a larger house; it's for savvy borrowers who can regularly afford a house on a 30-year fixed mortgage, but choose the interest-only option to save additional discretionary income.’
In terms of underwriting, these loans are nothing like the interest-only loans of the pre-crisis years. Borrowers must put 20% down and have a minimum FICO score of 720. What's more, borrowers must achieve a 42% debt-to-income ratio in order to participate in the program.
Borrowers will be required to begin paying down the principal of the loan after 10 years.
The new program will give UWM's brokers the ability to help a broader range of qualified borrowers achieve their dream of home ownership, the company says in its release.