Non-QM Loans

A Non-Qualified Mortgage (Non-QM) Loan is a type of mortgage that does not meet the strict criteria set by the Consumer Financial Protection Bureau (CFPB) for Qualified Mortgages (QM). These loans offer more flexible underwriting standards, making them ideal for borrowers with unique financial situations that traditional loans may not accommodate.

Non-QM loans are suitable for:

• Self-Employed Individuals: Those with fluctuating or non-traditional income sources.
• Real Estate Investors: Borrowers looking to finance investment properties.
• High Debt-to-Income (DTI) Ratio Borrowers: Individuals with higher existing debts.
• Foreign Nationals: Non-U.S. citizens or residents purchasing property in the U.S.
• Borrowers with Credit Challenges: Those with lower credit scores or past credit issues.

• Flexible Income Verification: Alternatives to traditional pay stubs and tax returns.
• Higher Loan Amounts: Suitable for high-value properties.
• Accommodates Unique Financial Profiles: Ideal for self-employed, investors, and borrowers with high DTI.
• Customized Loan Terms: Tailored to fit specific borrower needs.

While both Non-QM and conventional loans are funded by private lenders and are not government-backed, Non-QM loans offer more flexible underwriting criteria. Conventional loans adhere to strict guidelines set by entities like Fannie Mae and Freddie Mac, whereas Non-QM loans cater to borrowers who may not meet these stringent requirements.

• Bank Statement Loans: Use bank statements to verify income.
• Debt Service Coverage Ratio (DSCR) Loans: Focus on property income.
• Profit & Loss (P&L) Based Loans: Assess business profitability.
• No Ratio Loans: Eliminate the traditional DTI ratio requirement.
• Interest-Only Loans: Pay only interest for an initial period.
• Foreign National Loans: Designed for non-U.S. citizens or residents.
• Asset-Based Loans: Secured by the borrower’s assets rather than income.

A Bank Statement Loan verifies income using your bank statements instead of traditional pay stubs or tax returns. This is ideal for self-employed individuals or those with irregular income streams, providing a more accurate reflection of your financial health.

Debt Service Coverage Ratio (DSCR) Loans evaluate your ability to cover debt payments based on the income generated by the property itself. These loans are primarily used for investment properties, focusing on the property's cash flow rather than the borrower’s personal income.

Profit and Loss (P&L) Based Loans assess your business's profitability through detailed profit and loss statements. This type of loan is tailored for self-employed borrowers with stable business incomes, offering flexible underwriting criteria that accommodate non-traditional income verification.

No Ratio Loans eliminate the traditional debt-to-income (DTI) ratio requirement. Instead, lenders focus on other financial indicators such as credit score and assets. This option is suitable for borrowers with high existing debts but strong financial stability.​

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An Interest-Only Loan allows borrowers to pay only the interest for an initial period (typically 5-10 years), reducing monthly payments temporarily. After this period, payments increase to cover both principal and interest. This option provides flexibility in managing cash flow during the early stages of homeownership.

Foreign National Loans are designed for non-U.S. citizens or residents looking to purchase property in the United States. These loans offer tailored financing options without requiring a Social Security Number (SSN), making it easier for international buyers to secure a mortgage.

Asset-Based Loans use your assets, such as savings, investments, or other property, to qualify for a mortgage instead of relying solely on income verification. This is ideal for borrowers with substantial assets but inconsistent or non-traditional income sources.​

• Credit Score: Typically starts at 620, but may vary by loan type and lender.
• Income Verification: Alternative methods such as bank statements, P&L statements, or asset-based verification.
• Debt-to-Income Ratio: Flexible, often up to 50% for qualified borrowers.
• Assets: Sufficient assets or reserves to support the loan.
• Property Standards: Must meet lender’s guidelines and property condition standards.

1. Assess Your Financial Situation: Determine if a Non-QM loan aligns with your financial profile.
2. Gather Necessary Documentation: Prepare alternative income verification documents, proof of assets, and other relevant financial information.
3. Choose a Specialized Lender: Select a lender experienced in Non-QM loans.
4. Submit Your Application: Complete the loan application with all required information.
5. Undergo Financial Review: Lender evaluates your creditworthiness based on Non-QM criteria.
6. Receive Approval and Close the Loan: Finalize the mortgage agreement and complete the closing process.