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. Qualified vs. Non-Qualified Mortgages Qualified mortgage – Non-qualified mortgage Advantages 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 is less stringent Downsides 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 NON-QM MORTGAGES: WHO BENEFITS? 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).