What Is a Non-QM Loan?

 

How Do Non-QM Mortgages Work

 

Non-QM loans can fill the niche for those who don’t necessarily fit into the “qualified-mortgage box.” A qualified mortgage follows rules set by the CFPB and Federal Government; however, a Non-QM loan use alternate methods of income verification to help you get approved for a mortgage loan.

What a Non-QM Loan Is Not:

 

  • It is not a subprime mortgage
  • It is not a “stated-income” loan

What a Non-QM Loan Is:

 

  • A home financing solution for responsible borrowers with unique financial circumstances
  • A flexible home loan that covers a variety of consumer needs

Types of Income Verification Methods Allowed for Non-QM Loans:

Full Documentation (same as qualified mortgages)

One-Year Tax Return Program

  • Amortizing borrowers must be self employed for two years
  • Personal tax returns for past year, including all schedules and attachments
  • Business tax returns for same year with all schedules
  • Signed business Profit and Loss statement in many cases

Bank Statement Program

  • Personal or business statements
  • 100% of eligible deposits from personal and business accounts
  • Profit and Loss statement required for 12 months or previous year and YTD

Asset Depletion (purchase or rate-and-term refinance only, owner-occupied or second homes)

  • 60-day account history required
  • 100% of vested retirement for borrowers over 59 ½ years old and 50% of vested retirement assets if borrowers are under 59 ½ years old
  • Used 3% rate of return on assets amortized over seven years

Non-QM Loan Benefits

 

  • Ideal for self employed and or people with non-traditional financial circumstances
  • Alternative income verification methods accepted
  • Multiple fixed and adjustable loan options are available
  • Loan maximum is as high as $5 million
  • Cash out may be as high as $500,000
  • Second homes and investment properties may be eligible