Non-QM Loans
What are Non-QM Loans?
Many homeowners lack the standard or continuous sources of income required by mortgage lenders. However, even if they are unable to qualify for conventional loans for a variety of reasons, these buyers may have sufficient income or assets to afford homeownership. In certain cases, a non-qualified mortgage (non-QM) could be the solution.
Following the 2008 mortgage catastrophe, federal regulators tightened borrower standards for mortgage loans that might be backed and purchased by government entities. Loans that meet all of the new standards are known as “qualified mortgages.” Any loan that does not meet such requirements is known as a “non-qualified mortgage,” or non-QM.
A non-QM mortgage loan qualifies borrowers by using alternative means of income verification. Even if these loans may not match the normal criteria, they are not always riskier loans. All borrowers must still verify their ability to repay the loan. Because non-QM loans require more labor to process, interest rates typically range between 0.5% and 5% higher, depending on the loan terms.
Non-QM Loan Benefits
- They provide mortgage funding for those with non-traditional income or financial situations.
- They allow for loans up to $2.5 million.
- Fixed-rate and adjustable-rate non-QM mortgages are available.
- Non-QM loans close just as quickly as conventional mortgages.
- They can be made to legal entities, like family trusts, instead of just individuals.
- No mortgage insurance is required on non-QM loans.
- They can be used to free up cash for investments.
- Non-QM cash-out refinance loans allow borrowers to take as much as $500,000 out in equity, depending on the situation.
What are the Non-QM Loan Requirements?
The documents required will vary greatly based on the financial situation of the applicant. In order to verify income, you can provide either personal and business tax returns or bank statements or investment account statements. In some cases, income verification is not even necessary. Credit scores and debt-to-income ratios will be factored in. Non-QM loans take a more holistic approach to an applicant’s financial situation though, rather than relying on a standard underwriting matrix.
Types of Non-QM Loans
Non-QM loans employ non-standard mortgage terms in order to help borrowers qualify. These include loan terms longer than 30 years, interest-only loans, higher debt ratios or alternate income verification methods. Non-QM loans can be used for primary residence mortgages, refinance loans, cash-out refinances, and investment property loans.
DSCR Loans
Never reveal your tax returns or confirm your income as you build your investment empire. The cash flow from your property is enough. Your real estate assets can finance themselves with DSCR loans, which speeds up approvals for astute investors.
Self-employed bank statement loans
Tax headaches and W-2s are over. It’s enough if your income comes from bank deposits, specifically designed for gig workers, freelancers, and business owners who require mortgage options that complement their lifestyle.
P&L-Only Mortgage
Only have a profit and loss statement? All you need is that. If your business is doing well, getting a mortgage should be easy. A CPA-prepared P&L makes the process of becoming a homeowner or refinancing easy because no tax returns are needed.
ITINs Loans
No Social Security number? No issue. With your ITIN, you can still have a piece of the American dream. With our ITIN loan programs, which have few restrictions and a high degree of trust, we assist non-citizens in purchasing or refinancing homes.
Foreign National Loans
Purchasing real estate in the United States has never been easier. There is no requirement for a U.S. credit score or residency if you are foreign or a newcomer to the United States; our Foreign National loans are intended for international investors.
Vacant Land Loans
Have you ever considered building your own house? We offer financing for undeveloped land across the nation, allowing you to buy desirable undeveloped land for future home construction, rental properties, or even investment properties.
WVOE-Only Mortgage
You only need to provide a written employment verification to be admitted. No pay stubs. No W-2s. Ideal for salaried workers with complex tax circumstances but a spotless work history.
1099-Only Mortgage
Make money with 1099s? Millions do the same, and now you have a mortgage that pays off. Avoid the maze of paperwork. You can quickly qualify using just your 1099 forms.
No-Income Documentation Loans
Is it difficult to provide evidence of income? You don’t need proof of income to purchase or refinance your house. Seasonal workers, retirees, and people with significant assets but unconventional incomes are all excellent candidates for these kinds of loans.
40-Year Mortgage with the Option to Pay Interest Only
Reduce your monthly installments to free up more cash. Interest-only options and 40-year terms give you flexibility now without sacrificing ownership later.
Mortgage with Asset Utilization
Possess assets but no W2 income? To be eligible, you can use your retirement funds, investments, and savings. Ideal for early retirees, high net worth individuals, and anyone else who relies on their assets rather than their paychecks.
FAQ
A Non-QM loan is a mortgage that does not meet the standards set by the Consumer Financial Protection Bureau’s Qualified Mortgage (QM) rule.
Borrowers with unique financial situations, such as self-employed individuals or those with irregular income.
They can have higher interest rates and fees due to the increased risk for lenders.
Yes, refinancing options are available for Non-QM loans.
