A Non-Qualified Mortgage (Non-QM) is a loan that doesn’t meet the standards of a qualified mortgage and uses non-traditional methods of income verification to help a borrower get approved for a home loan.
Non-QM loans fill the gap for borrowers who may be self-employed, have non-traditional income, or have had difficulty qualifying for a QM loan due to credit issues in the past. Non-QM loans have underwriting guidelines that allow the lender to view the “bigger picture” of your financial history thus determining a borrower’s ability to repay in a slightly different lens than usual.
We’re here to make the (Non-QM) home loan process a whole lot easier, with tools and expertise that will help guide you along the way, starting with our FREE (Non-QM) Loan Qualifier.
We’ll help you clearly see differences between loan programs, allowing you to choose the right one for you whether you’re a first-time home buyer or a seasoned investor.
Whether you’re a business owner, entrepreneur, investor, or free-lancer; we can help you with your loan qualification. Get a mortgage using your real income.
A Non-Qualified Mortgage (Non-QM) is a type of loan that falls outside the standard rules set by the Consumer Financial Protection Bureau’s (CFPB) qualified mortgage guidelines. In other words, it doesn’t meet the typical underwriting criteria that most traditional loans adhere to. These loans are typically free from tax returns and W2’s.
So, who stands to benefit from a Non-QM loan? Here’s a rundown:
Self-Employed Individuals: Traditional loans often require a stable income history, something that self-employed folks might struggle to demonstrate. Non-QM loans may accept alternative forms of income verification.
Investors: Those who are looking to finance multiple properties may find more flexibility with Non-QM loans.
People with Credit Issues: If you’ve got a lower credit score or a blemish on your credit history, Non-QM lenders are generally more lenient.
Foreign Nationals: These loans can help people who are not U.S. citizens and might not have a traditional U.S. credit profile.
High Net Worth Individuals: Those with significant assets but irregular income can benefit from asset depletion loans, a type of Non-QM loan.
Those Seeking Unique Loan Structures: Non-QM loans offer features like interest-only payments, which are generally not available in qualified loans.
Recent Homebuyers: If you’ve just sold a home and haven’t yet received the proceeds, a Non-QM loan can bridge the gap.
Remember, Non-QM loans often come with higher interest rates and may require larger down payments. It’s crucial to weigh these factors and consult professionals to determine if it’s the right fit for your situation.
Before you can understand what a Non-Qualified Mortgage (Non-QM) is you first we need to understand what a Qualified Mortgage (QM) is. A Qualified Mortgage has typical standards that require W2 income, 2-year tax returns, dept to income no more than 43%, etc. These minimum standards for a qualified mortgages are part of the 2010 Consumer Protection Act and Dodd-Frank Wall Street Reform Act brought on by the Great Recession in 2008. However not everyone fits these standards.
With a 10-year interest-only mortgage, consider another benefit: the period of time that you have a rate lock expires only at the end of the initial ten years. It would almost be like your mortgage approval is held over until the mortgage converts to a standard 30 year fixed mortgage.
Interest-only mortgages have incredibly enticing perks. You can keep your monthly payment low by paying just the interest portion and keeping
If you are self-employed, have a commission-based pay structure, leverage your liquid assets for gains, or have a rising income, consider a 10-year interest-only mortgage.
Highlights for Interest Only Jumbo:
Since you’re experienced in sales and problem-solving, I’d say take a hard look at both sides. Is the flexibility and initial cash flow more beneficial for your situation, or does the long-term cost and potential for payment shock outweigh those initial benefits?
Given your focus on fiscal responsibility, it’s also worth calculating the long-term implications, not just the short-term cash flow advantages. Hope this helps!
your principal amount unchanged.
Non-QM (Non-Qualified Mortgage) loans with a focus on Debt Service Coverage Ratio (DSCR) for rental income—now that’s a specialized topic! These loans are particularly interesting for real estate investors and can be quite an asset if used wisely.
What Is It?
A Non-QM DSCR Mortgage evaluates the viability of a loan based on the rental income of the property, rather than the borrower’s personal income. The Debt Service Coverage Ratio is calculated by dividing the property’s Net Operating Income (NOI) by the Debt Service (the mortgage payment). A ratio of 1 or higher generally means the property’s income covers the mortgage payment.
How The Non-QM – DSCR Mortgage Works
These mortgages are portfolio loans that are not connected to any government agency. Approvals are primarily focused on the property cash flow.
Highlights for Non-QM – DSCR Loan
Things to Consider:
Property Management: Given that the loan is based on the rental income, effective property management is crucial.
Market Research: Understanding the rental market where you’re investing is essential to ensure that you’ll maintain a positive DSCR.
Who is our – 1099 ONLY Mortgages Best Suited For?
This mortgage is an excellent option for someone looking to purchase or refinance a home and cannot provide “traditional” income documentation i.e., tax returns as a means of qualification. Unlike most mortgage programs in the marketplace, this mortgage allows you to use only your 1099’s that you receive for 2 calendar years as your form of income verification. We must run a 4506 and retrieve a 1099 transcript. This program verifies the validity of the 1099’s, ensures they have been filed with the IRS by the issuing party. This program is centered around an applicant who generates income either in the form of commissions or as an independent contractor. We do not require full tax returns or bank statements to verify deposits
1099 ONLY Mortgage Works
These mortgages are portfolio mortgages that are not connected to any government agency. Approvals are heavily focused on your 1099’s that are issued to you for the last 2 years. How long you have been in business, and how you derive your income. The focus is to understand your “business concept.”
Highlights for Non-QM – 1099 ONLY Program
An Asset Utilization Jumbo Loan, sometimes called an “Asset Depletion Mortgage,” allows borrowers to qualify for a jumbo loan based on their liquid assets, like savings, retirement accounts, and investment portfolios. Essentially, the lender calculates an income stream from these assets and includes it as qualifying income.
Highlights for Asset Utilization Jumbo Mortgages
Consult Financial Advisors: Since you’re leveraging your investment and retirement accounts, talking to a financial advisor to understand the implications is a good move.
Gather All Documentation: Asset statements, tax returns, and other financial docs will be crucial here.
Check Liquidity Constraints: Make sure you understand if and how the loan terms might require you to keep assets in place for a certain duration.
Who is our Non-QM – Bank Statement Jumbo Mortgages Best Suited For?
This mortgage is an excellent option for someone looking to purchase or refinance a home and cannot provide “traditional” income documentation i.e., tax returns as a means of qualification. Unlike most mortgage programs in the marketplace, this mortgage allows you to use your bank deposits instead of traditional income documentation. This program is centered around the self-employed entrepreneur, who generates income that may not be fully reflected on their tax returns.
Bank Statement Jumbo Mortgages Work
This mortgage type allows borrowers to use their business or personal bank statements as proof of income instead of traditional methods like W-2s or tax returns. These loans are especially useful for self-employed individuals or business owners whose income might not be easily defined through conventional means.
Highlights for Non-QM – Bank Statement Jumbo Mortgages
Get Organized: Make sure your bank statements are in pristine condition. Any odd, large deposits might require explanation.
Professional Guidance: Given the complexities, working with a mortgage broker who specializes in these types of loans can save you time and possibly money.
It’s good to have a good tax preparer. They may need to give you a letter of expense factor. This can increase the income being considered.
This mortgage type is designed to finance multi-family properties with 5 to 8 units. Because these properties typically generate a rental income, lenders look not only at your personal financials but also at the property’s revenue potential. And since the loan amount is likely to be high, it falls into the jumbo category.
Highlights for Multi-Family (5 Units or more) Commercial
Who is our Foreign National Jumbo Loans Best Suited For?
This mortgage is a great option for someone who may not live In the United States and wants to purchase or refinance a property. This program works for individuals who live and work in the United States that want to purchase but may not have a social security number, a green card or proper documentation.
Highlights for Foreign National Jumbo Loans:
How Foreign National Jumbo Mortgages Work
These mortgages are portfolio loans that are not connected to any government agency. These loans are ideal for a client that may not live in the US but would like to invest in real estate. Most traditional lenders require a social security number or some form of citizenship allowing you to be in the US legally. This program has no such requirements. An additional feature is that this program allows for borrowers to be living and working in the US and still qualify.