Non-QM loan


1. What is Non-QM loan?

Before we talk about Non-QM loan,  you may want to know what is QM loan. A QM(Qualified Mortgages) loan is a loan meets certain requirements for lender protection and secondary market trading. QM loans tend to be traditional government-backed loans and conventional loans (basically non-government backed traditional loans). 

A Non-QM loan, or a non-qualified mortgage, is a type of mortgage loan that allows you to qualify based on alternative methods, instead of the traditional income verification required for most loans. Common examples include bank statements, using your assets, or using rental income as income.

2. Why chose Non-QM loan

One of the primary benefits of a non-QM loan is that it allows buyers with lower credit scores, self-employed, small business owners, non-traditional jobs, investors who have complicated income or have 10+ properties, and foreigners who want to buy investment properties in the USA. They require less proof of income for buyers. Non-QM loans are also almost as easy to apply for as a traditional loan

3. 4 popular Non-QM Loans

1) Asset Qualifier Home Loan 

No employment or income required

This loan program gives homebuyers the ability to qualify for a mortgage using their liquid assets. Borrowers need to have enough assets after closing. Qualifying assets include retirement, checking, savings accounts and stocks.

2) Bank Statement Home Loan

A Mortgage For Self-Employed, no income document required.

This loan program is a loan option for eligible self-employed borrowers to purchase or refinance a home. This program allows 6-12 month personal or business bank statements to calculate income without requiring tax returns. 

3) Investor Cash Flow Loan(DSCR: Debt service coverage ratio)

Mortgage For Real Estate Investors.

This loan program uses the rental income as income to qualify the loan. Tax returns are not required. This loan saves you from submitting complicated income statements and tax returns. This loan is also good for investors who have more than 10 properties.

4) Written Verification of Employment or P&L

Borrower prepare P&L, CPA letter or written VOE required.

This loan is designed to help small business owners or salary/wage earning, P&L, CPA letter, or written VOE can be used to verify income source.

4. Advantage and disadvantage of Non-QM loan.
Advantages: 
1) Easy to apply
2) Minimus documents are needed
3) Good for borrowers who can't get regular loan, especially for investors
Disadvantages:
1) Higher interest rate than regular loan
2) May have longer pre-pay penalty peroid
3) May need to pay point 

As a realtor and licensed loan officer, I work with more than 30+ different lenders, no matter retail lenders or wholesale lenders, big lenders or small lenders, traditional lenders or innovative lenders. I know how to tailor the loan or aid my clients to find the best loan progams, no matter QM loan or Non-QM loan.

I am working with a lender with 2 Non-QM loans now. The loan is good for primary home or investment home, 30% down, 5.875% interest rate, no point. 

Contact me if you need more information.
 

Vicki