Non-QM home loans are designed specifically for people who don’t meet the stringent qualifications required for traditional loan. This means that if other banks have turned you down, there’s a good chance that a non-QM lender will be willing to work with you. And because there are so many non-QM loans available, you can find one that perfectly suits your needs and budget. Below are reasons why you should consider non-QM home loans.

  • Great Alternative

During the housing crisis, many borrowers were forced into foreclosure. Many mortgages defaulted because borrowers were unable to afford their payments which in turn created much tighter underwriting standards and prevented many individuals from being able to buy or refinance a home. Fortunately, there are now alternatives to traditional mortgages. Some lenders offer asset depletion loans, these loans may be associated with high-interest rates, but they are ideal for individuals with substantial liquid assets. These loans are a great way to buy a primary or secondary residence. Foreign nationals do not need a social security number and can use their existing income to qualify for the loan.

Non-QM home loan mortgages may allow for a lower credit score than traditional mortgages. They also can be ideal for self-employed individuals and business owners since they may not require extensive paperwork and other documentation.  There are also Interest-only mortgages available. These mortgages are not subject to the CFPB’s qualified mortgage rule.

  • One Day Out of Foreclosure

Different types of mortgage lenders are emerging from the financial crisis to help underqualified borrowers buy homes. These loans are often called non-QM and Fannie Mae or Freddie Mac do not offer or back them.  However, they may offer better terms and more flexibility for borrowers.

In addition to being nontraditional, non-QM loans may allow borrowers to qualify one day after a bankruptcy or foreclosure. These loans are considered riskier than traditional mortgages, so borrowers should be prepared for higher rates and fees.

Non-QM home loans are available to self-employed borrowers, many of which complain about the massive amount of documentation they must provide for a traditional mortgage. Examples of workarounds are that a non-QM lender may be able to use business or personal bank statements to calculate income. Non-QM loans are also available to foreign nationals. These individuals are usually citizens of another country but may live in the United States.

For those who qualify for non-QM home loans, a down payment of 10%-30% is required. These mortgages can also be used for investing in rental properties and in this instance minimal documentation is required.  Non-QM loans are a good option for many borrowers. These loans are also available to borrowers with credit issues.

  • Self-employed people

The non-QM home loans market has grown steadily over the few years. This has helped many self-employed borrowers purchase homes. These borrowers often need additional documentation to meet loan requirements.  Mortgage companies have been more discerning in recent years; they have become more aggressive in scrutinizing tax returns and reviewing year-to-date profit and loss statements. Non-QM programs often have more flexible income verification requirements. These programs allow the borrower to count the cash flow from their business as an income.  

Last Words

Non-QM home loans can be an option for borrowers who don’t fit into the traditional mortgage loan boxes. They offer more flexibility and can often close faster than QM loans. Contact us today if you’re interested in learning more about non-QM home loans. We would be happy to answer any questions and help you achieve homeownership.