A non-qualified mortgage — or non-QM — is a home mortgage that is not required to meet standard documentation requirements as usually requested by Agencies that purchase Conforming Loans. NON-QM LOANS do the Magic, when you need “Outside-of-the-Box” loans with flexible approval guidelines
- Non-QM Programs offer flexible loan eligibility requirements, that include credit scores and debt-to-income (DTI) ratios
- The processes of reviewing financial documentation and employment verification are less stringent
- The interest rates are usually higher
- Fewer lenders offer non-qualified mortgages, hence the selection of Program providers is less abundant than on Conforming loans
- There is a higher risk that these loans could default due to a less stringent process of income and asset verification
- Borrowers who are unable to provide sufficient documentation regarding their finances and employment history like individuals that are self-employed or work in fields that do not provide financial paper trail for lending institutions to review and to verify.
- Borrowers with a delinquent credit history that contains bankruptcies, foreclosures, short sales, low credit scores due to missed payments,…
- Borrowers with high debt. Lenders typically refuse to give mortgages to anyone with a DTI above 50%. However, some of Non-QM Loans permit for loan approvals without documenting income (No-Ratio Loans) or with presenting bank statements reflecting income deposits instead of presenting tax returns (Bank Statement Loans).
