Mortgage Warehouse Facilities: Advance Rates, Haircut Spreads, Gestation Periods & Repurchase Lines

## Structural Mechanics of Mortgage Warehouse Financing

Non-bank mortgage lenders rely on warehouse repurchase agreements to fund residential and commercial originations prior to secondary market securitization:

### 1. Haircut Economics and Borrowing Base Availability

Warehouse lines are legally structured as master repurchase agreements (repos):

$$\text{Available Borrowing Capacity} = \sum_{i=1}^{M} \min(\text{Note Balance}_i, \text{Market Value}_i) \times (1 - H_i)$$

Where $H_i$ represents the product-specific haircut:

| Loan Product Tier | Advance Rate | Haircut ($H_i$) | Typical Dwell Limit (Days) | Benchmark Spread |
|:-------------------------|:------------:|:---------------:|:--------------------------:|:----------------:|
| Agency Conforming 30-Yr | 98.50% | 1.50% | 30 Days | SOFR + 1.85% |
| FHA / VA Government | 98.00% | 2.00% | 30 Days | SOFR + 2.00% |
| Non-QM Jumbo / DSCR | 93.00% | 7.00% | 45 Days | SOFR + 3.25% |
| Fix-and-Flip Bridge Line | 88.00% | 12.00% | 60 Days | SOFR + 4.50% |

### 2. Mark-to-Market Margin Calls and Covenants

Warehouse agreements enforce strict financial covenants: minimum $5,000,000 adjusted tangible net worth, maximum 10:1 leverage ratio, and minimum 90-day unencumbered liquidity buffers.