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