Home loans are heavily dependent on your unique situation. Usually, a broker will base your mortgage program on income type, income amount, property type, credit position, etc. These qualifiers are common with mainstream loan types like Conventional, FHA, VA, and USDA. What if you don’t fit into any of these categories or don’t meet the right criteria?
Luckily, there’s hope with Non-QM mortgages, or Non-qualified mortgages. Non-QM home loans are not required to meet agency-standard documentation requirements outlined by the Consumer Financial Protection Bureau. In simpler words, a non-QM loan is designed to help home buyers who can’t meet the strict criteria of a qualifying mortgage.
The Non-QM mortgage industry is growing rapidly, as more borrowers than ever have harder-to-qualify income sources. 59 million Americans are self-employed or gig workers - that’s 36% of all workers - which means they do not receive W-2s typically used to verify income. Here’s a list of situations in which Non QM can be good for:
No tax returns
Bankruptcy, foreclosure, forbearance
No proof of employment
No income with significant assets
Investment properties as only form of income
So how do Non-QM lenders qualify borrowers? Non-QM lenders will quantify your ability to pay a loan back using non-traditional things like bank statements, assets, or investment properties.
Non-QM opens up a lot of options for those who don’t have the usual income documentation generally used by lenders for issuing qualified mortgages. We are excited for the opportunities that Non-QM offers borrowers and look forward to helping even more clients obtain home loans.