Nonqualified mortgages (non-QM) are alternative mortgage loan programs designed to help borrowers who can’t qualify using
standard document programs.
Government and conventional loans have set agency mortgage guidelines, which may disqualify many borrowers. For example, if you are self-employed or need all the necessary documentation to qualify for a traditional mortgage, you should look at non-qualified mortgages.
Without Non-QM loans, certain people could not purchase their homes. These loans are not backed by any government agency and are considered portfolio loans.
Types of Non-QM Loans:
- Asset Qualifier
- Bank Statements
- Debt Service Covered Ratio (DSCR)
- 2nd Mortgage/ HELOC
- ITIN/Foreign
- P&L (Profit & Loss)
- Non Warrantable
- No Ratio
- 1099/WVOE
NON-QM Pros & Cons
PROS:
- Same Application as a traditional mortgage
- Lenient Guidelines requiring less proof of income and docs
- Products available for foreign national
- Investors are not limited to the number of financed doors they own
CONS:
- Interest Rates and fees may be higher
- NON-QM loans can be challenging to find
- Down Payment requirements may be higher
- Require higher credit scores
Who Benefits from Non-QM Loans
The following types of borrowers benefit:
- Investors who are CAPPED at the allowed number of doors financed
- Mortgage Borrowers who are self-employed and do not meet the debt-to-income ratio requirements due to the business expenses
- Homebuyers with a prior bankruptcy and/or foreclosure who have reestablished themselves but did not meet the minimum waiting period requirements after bankruptcy and/or a housing event
- Homebuyers who have had late mortgage payments in the last 12 months on their previous mortgage
- Retirees, self-employed, entrepreneurs, and wealthy individuals who have assets but no traditional income and/or regular job
- High-end homebuyers who cannot qualify for traditional jumbo loans
👉 Have a unique financial situation? Let’s explore if a Non-QM loan fits your needs!
📞 Call me (510)-542-7834 today!
Tina Bui – Your Trusted Mortgage Advisor