Non-QM Loans

All About Non-QM Loans

What is a Non-QM loan?

A non-QM or non-qualified mortgage is a home loan designed to help home buyers who can't meet the strict criteria of a qualifying mortgage. For example, if you are self-employed or don't have all the necessary documentation to qualify for a traditional mortgage, you might need to look at non-qualified mortgages.

Non-QM Qualification Requirements

The best way to understand a non-qualifying mortgage is to look at the criteria for traditional, qualifying mortgages. To qualify for a traditional mortgage, you must meet these requirements:

  • Income

    You must have verifiable income, including pay stubs, W-2s, and tax returns.

  • Debt

    Your debt-to-income ratio (DTI) must be 43% or less. This is the amount of your monthly income that goes toward your existing debts.

  • Limits on fees

    Points and fees on your loan cannot exceed 3% of the loan amount.

  • No risky loan features

    Risky features include interest-only loans (where you only pay interest without reducing the principal), negative amortization (where your principal can increase, even while you are making payments), or balloon payments (where a larger payment can be tacked on to the end of the loan).

  • Loan Term

    The loan term must be 30 years or less.

Is a Non-QM Loan for you?

A non-QM is a good idea when you have the income to make regular, on-time mortgage payments, but cannot get a qualifying mortgage. The type of borrower who might benefit from a non-QM loan includes:

  • ◉ Retiree
  • ◉ Self-employed
  • ◉ Real estate investor
  • ◉ Business owner
  • ◉ Foreign national
  • ◉ Buyer who lives off investments, or has high assets and low income
  • ◉ Buyer with a high debt-to-income ratio
  • ◉ Buyer with less-than-perfect credit

Need a Non-QM loan? Fill out the form and let's get you started.

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