If your financial situation doesn't fit the traditional mortgage criteria, a Non-Qualified Mortgage (Non-QM) might be a viable option. These loans offer flexibility for individuals whose income or credit history falls outside the standard guidelines.
A Non-Qualified Mortgage (Non-QM) does not adhere to the consumer protection requirements established by the Dodd-Frank Act. Unlike Qualified Mortgages (QM), which have strict criteria, Non-QM loans offer more flexibility for borrowers with unique financial situations. For instance, if your debt-to-income ratio exceeds 43% or you have irregular income that doesn't meet traditional verification standards, a Non-QM loan may be an appropriate solution.
Non-QM loans can be beneficial for various types of borrowers who might not qualify for a conventional mortgage:
Self-Employed Borrowers: Traditional mortgage programs often require extensive documentation of self-employed income. Non-QM lenders might offer bank statement loans, allowing you to qualify based on your bank statements instead of tax returns.
High Net-Worth Individuals: If you have substantial assets but less regular income, an asset depletion loan might be available. This approach allows you to qualify by dividing your asset balance by a predetermined period to calculate qualifying income.
Real Estate Investors: For investors owning more than ten financed properties, or those seeking debt-service coverage ratio loans, Non-QM options may provide a suitable alternative to conventional lending limits.
Borrowers with Recent Bad Credit: Non-QM loans can sometimes be accessed shortly after major credit events like bankruptcy or foreclosure, whereas traditional lenders often require a waiting period of two to seven years.
Foreign Nationals: If you're a foreign national working or vacationing in the U.S., Non-QM loans may not require U.S. income proof, credit history, or a Social Security number.
Interest-Only Payment Options: Non-QM loans may offer interest-only payment options, which can be advantageous for individuals with fluctuating income, providing lower payments during less financially stable periods.
A Non-QM loan can be a practical choice if you have the financial capacity to make regular payments but don't fit the traditional mortgage criteria. For instance, if you own a business with variable income and have a strong credit score but struggle to meet conventional income verification requirements, a Non-QM loan may be the solution.
By opting for a Non-QM loan, you can access financing tailored to your unique financial circumstances, bridging the gap until you can meet conventional mortgage standards or refinance into a traditional loan.
If you think a Non-QM loan might be right for you, our team is here to help. Contact us to explore your options and find the best solution for your financial needs.
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