Non-QM
If you don’t meet the strict requirements of traditional, qualified mortgages, a Non-QM (Non-Qualified Mortgage) loan could be a solution for you. Non-QM loans provide alternative financing for borrowers with unique financial situations, such as self-employed individuals, ITIN, foreign nationals, investors, or those with high debt-to-income ratios.
A Non-Qualified Mortgage (Non-QM) loan is a type of loan that doesn’t conform to the standard underwriting guidelines set by Fannie Mae or Freddie Mac. These loans are designed for borrowers who may not meet traditional lending criteria but can still demonstrate the ability to repay the loan. Non-QM loans often cater to self-employed individuals, real estate investors, or those with complex financial situations, such as large amounts of assets but inconsistent income.
Instead of traditional income verification, Non-QM loans use alternative methods like bank statements, asset verification, or even rental income to qualify borrowers.
Non-QM Loan Requirements
The requirements for a Non-QM loan are more flexible than conventional loans, but they still include:
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Alternative Income Documentation: Lenders may use bank statements, rental income, or asset-based verification instead of tax returns or W-2s to qualify you. Some programs use 1099s or a P&L to calculate income.
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Credit Score: A credit score of 620 or higher is typically required, though some lenders may accept lower scores depending on the overall financial profile.
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Down Payment: Non-QM loans typically require a 10% to 30% down payment, depending on the borrower’s financial situation and the loan type.
Non-QM Loan Benefits
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Flexible Qualification: Non-QM loans allow for alternative methods of verifying income, making them ideal for self-employed borrowers or those with complex financial situations.
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Custom Solutions: These loans can be tailored to fit a wide range of borrower needs, whether for investment properties, jumbo loans, or high DTI borrowers.
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No Prepayment Penalty: Non-QM loans often don’t have prepayment penalties, giving you the flexibility to pay off the loan early if desired.
The Bottom Line on Non-QM Loans
A Non-QM loan is an excellent option if you have unique financial circumstances that don’t fit the mold of traditional mortgages. If you’re looking for flexible financing options, contact us today to learn how a Non-QM loan can help you achieve your homeownership or investment goals.
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