What is a Non-Qm loan?
A non-qualified mortgage is a loan product that doesn’t conform with the lending guidelines set by CFPB. They are exclusively designed for home buyers who can’t conform to the stringent requirements for a qualified mortgage.
Real estate investors, foreign nationals, self-employed individuals, and credit-challenged people may find it difficult to qualify for a conventional loan. This is where a non-QM loan can be helpful. It is a financing solution designed to help a particular group of borrowers to achieve their dream of homeownership.
Can a self-employed borrower benefit from a Non-Qm loan?
The self-employed have different financial situations than other borrowers which means complicated tax returns and paperwork, but a non-QM loan will help people obtain a house against traditional underwriting guidelines.
Self-employed people may have sporadic income. Some months they may receive a high income, while others are low. Because of this, obtaining a Qualified Mortgage is difficult since it shows the lender that your income is not always reliable.
A Non-QM home loan allows borrowers to verify income through bank statements without the need for pay-stubs and tax forms so that you can easily prove your ATR the loan.
Are Non-Qm loans more expensive?
Non-Qm loans are more expensive than traditional mortgages, both up front and in the long term. You'll likely pay higher closing costs due to the increased cost of points and fees that often come with a non-qm mortgage, and you'll probably have a significantly higher rate than you'd get with a traditional mortgage.
What is the down payment on a Non-Qm loan?
A 10% to 20% down payment is required on non-qm loans. The amount of down payment required on a home purchase depends on the borrower's credit score.
