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Non-QM Loan

A non-qualified mortgage (non-QM) is any home loan that does not comply with the Consumer Financial Protection Bureau’s (CFPB) existing rules on qualified mortgages (QM). One of the main components of a QM loan is one’s ability to repay and the guidelines set by the agencies like Fannie Mae and Freddie Mac abide by these rules. Non-QM loans are typically for consumers with unique income qualifying circumstances that fall outside Fannie Mae and Freddie Mac guidelines.

Many people today have incomes that fluctuate, such as self-employed business owners, hospitality workers, and retirees. This is where non-QM fills the gap, by providing flexible underwriting guidelines for responsible consumers with unique income circumstances. Non-QM is also valuable for the consumer who has had a ding on their credit like a bankruptcy or past delinquent debt that caused their credit score (FICO) to go down below agency guidelines.

Here are a few key things you need to know:

  • To qualify for a non-QM loan we start by running all applicants through an automated underwriting system to ensure they do not qualify for an agency loans through Fannie Mae, Freddie Mac, or government-insured loans.
  • Non-QM loans typically have interest rates that are, on average, 1.25% higher than QM loans.
  • Alternative income verification methods are accepted, such as bank statements and asset depletion.
  • Recent bankruptcy and foreclosure are OK.
  • Loan amounts can go as high as $2.5 million.
  • Loan-to-value can be as high as 90% on purchase loans.
  • No income/asset investment property purchase at 80% LTV.

Non-QM loans fit a broad range of potential consumers and can be used to purchase primary, secondary, and investment properties. To ensure you qualify, it is best to consult a licensed loan officer, so they can assess your personal profile to determine if this product is right for you.

Non-QM Loan
Minimum FICO
Credit Score
540
Minimum
Down Payment
10%
Maximum
Loan To Value
90%*
Maximum
Debt To Income
50%*
Mortgage
Insurance
No
Years Since
Bankruptcy
1 day*
Years Since
Foreclosure
1
Years Since
Short Sale
1 day*
Special
Qualification
Requirements
None
Non-QM Loan
Minimum FICO
Credit Score
:
540
Minimum
Down Payment
:
10%
Maximum
Loan To Value
:
90%*
Maximum
Debt To Income
:
50%*
Mortgage
Insurance
:
No
Years Since
Bankruptcy
:
1 day*
Years Since
Foreclosure
:
1
Years Since
Short Sale
:
1 day*
Special
Qualification
Requirements
:
None