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Non QM Loans

Non-Qualified Mortgage Provides Flexibility Beyond Traditional Mortgages

Explore the flexibility and unique options of non-QM loans for unconventional homeownership.

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Understanding Non-Qualified Mortgages (Non-QM)

For Your Unique Home Financing Needs.

What is a Non-QM Loan?

Non-QM (Non-Qualified Mortgage) loans are designed for borrowers who may not meet the requirements of standard loan programs.
These loans cater to individuals with unique income streams, including self-employed, contractors, retirees, artists, etc.
They do not comply with the Consumer Financial Protection Bureau’s standard lending requirements for income verification and terms.

Qualified vs. Non-Qualified Mortgages

QM loans follow strict rules set by the CFPB and the federal government, providing safe harbor for lenders
Non-QM loans use alternative income verification methods and are not backed by FHA, VA, Fannie Mae, or Freddie Mac.

Who Benefits from Non-QM Loans

Self-employed borrowers with irregular income streams.
Prime borrowers seek interest-only payments or higher debt-to-income ratios
Borrowers with credit challenges: late payment, foreclosure, bankruptcy history.
Borrowers with substantial assets looking to maintain cash flow.

How Do Non-QM Mortgages Work?

Non-QM loans use alternate income verification methods.
Lenders may offer longer loan terms and interest-only payments.
Specific terms and conditions vary between lenders.

What a Non-QM Loan is Not and What It Is

This is a home financing solution for responsible borrowers with unique financial circumstances.
Prime borrowers seek interest-only payments or higher debt-to-income ratios
This is a flexible loan option that caters to various consumer needs.
This isn't a subprime mortgage; it's a secure investment.
It's not a 'stated-income' loan; it's reliable financing.

Non-QM Income Verification Methods

Full Documentation (same as Qualified Mortgages).
One-Year Tax Return Program.
12-Month Bank Statement Program.
Asset Qualifier (for purchase or rate-and-term refinance).

Criteria for Non-QM Loan EligibilityCriteria for Non-QM Loan Eligibility

Loan officers evaluate eligibility considering employment, assets, and income profiles of potential borrowers.
Flexible to accommodate a broad range of borrowers seeking diverse financial solutions for homeownership.

Benefits of Non-QM Loans

Ideal for self-employed and those with non-traditional financial circumstances.

Loan maximum can be as high as $2.5 million with cash-out options.

Accepts alternative income verification methods.

Offers multiple fixed and adjustable loan options.

Interest payments may be tax-deductible.

May provide protection against market downturns.

Non QM Loans Programs

Key Features

Temporary Buydown

Unlimited Cash Out

Asset Utilization

Program Highlights

Max Loan Amount $3.5M
Max 90% LTV
640 Min FICO
Interest-Only
40-Years Fixed Fully Amortizing
40-Years Fixed Interest-Only
Temporary Buydown (All Occupancies)
Occupancy
Condotels to $1.5M
Max 85% LTV Non-Warrantable Condos
ITIN Eligible to 80% LTV (See ITIN Matrix)
Purchase, Rate and Term, Debt Consolidation and Cash-Out Transactions

Max Cash Out:
- If LTV ≤ 60% = Unlimited
- If LTV > 60% = Max $750K
- Unlimited With 18 Months Reserves Exclusive of Cash Back
- If Express (DU®) Approved, May Waive
- the 18 Months Reserves for Loans < $2M
Full Doc (1 Year or 2 Years)
Alt Doc (1 Year or 2 Years):
- Personal Bank Statements
- Business Bank Statements
- P&L With 2 Months Bank Statements
- 1099
- P&L Only
- Asset Utilization (90% When Used as Supplemental
- Income With Full Doc or 12 or 24 Months Bank Statements)
- Max 85% LTV for All Other Eligible Documentation
- Types or When Income Is Derived From Assets Only

Important Key Notes for Non-QM Loans

Who should consider a Non-QM Mortgage?

Self-employed individuals with irregular income.
Prime borrowers seeking flexible terms.
Near/non-prime borrowers with past credit events.
Borrowers with substantial assets.

What are some advantages of Non-QM Loans?

Alternative income verification.
Multiple loan options.
Eligibility for second homes and investment properties.
Liquidity maintenance.
Potential tax deductions.

What are the Non-QM Home Loan Options?

Rate-and-term refinance.
Cash-out refinance.
New home purchase for owner-occupied or second homes.

The Key Differences Between QM (Qualified Mortgage) and Non-QM (Non-Qualified Mortgage) Loans

Qualified Mortgages (QM)

Income Proof:Requires traditional proof (e.g., pay stubs)

DTI Limits:Caps debt-to-income ratios at 43%

Loan Amounts: Limited, often conforming loan limits

Property Types Only for primary residences

Interest Rates: Typically, lower interest rates

Down Payments: Allows lower down payments (i.e, 3-20%)

Credit Score: Usually requires higher credit scores

Risk: Lower risk due to stricter rules

Documentation: Simpler documentation requirements

Borrower Types:Suited for traditional borrowers

Non-Qualified Mortgages (Non-QM)

Income Proof:Allows alternative proof (i.e, bank statements)

DTI Limits: Permits higher DTIs, some loans have no DTI limit

Loan Amounts: Can exceed conforming loan limits (jumbo loans)

Property Types Investment Properties and 2nd Homes

Interest Rates: Typically, higher interest rates

Down Payments: Allows higher down payments (i.e, 25-30%)

Credit Score: May accept lower credit scores.

Risk: Higher risk due to more flexible qualifications

Documentation: More complex paperwork

Borrower Types:May work for non-traditional borrowers

Versatility Non-traditional Income Verification Varied Choices

When exploring mortgage options. QM loans come with stricter guidelines, lower risk, and are ideal for traditional borrowers with stable income and credit. On the other hand, Non-QM loans offer flexibility, making homeownership possible for those with unique financial circumstances, but may come with slightly higher risk and interest rates.