Non-QM Loan

Non-qualified mortgages (non-QM loans) are handy for people who have found their dream home but were denied a home loan under more stringent qualified-mortgage standards.  For example, if you are self-employed or don't have all the necessary documentation to qualify for a traditional mortgage, you might need to look at non-QM mortgages.  A non-QM mortgage may provide a temporary lending solution until you meet regular mortgage guidelines and then be eligible to refinance into a conventional loan.

A non-QM loan is a type of mortgage loan that allows you to qualify based on alternative methods, instead of the traditional income verification required for most loans. Common examples include bank statements or using your assets as income (asset depletion loans).

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Non-qualified mortgages work best for borrowers who have enough income and assets to cover a mortgage, but whose income is difficult to document or whose high debt load or recent credit issues cause them to look riskier to lenders than they actually are.
 

Non-QM wholesale lenders offer a number of loan product options through approved mortgage brokers  for:

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• BORROWERS WHO ARE SELF-EMPLOYED
  
  While standard loan programs require tax documents to prove your self-employed income, non-QM lenders may offer bank statement mortgages with no need for filed tax paperwork. The lender evaluates deposits based on 12 to 24 months’ worth of personal or business statements to determine your qualifying income.
   

• BORROWERS WITH HIGH NET WORTH
  
  Some lenders allow you to divide the total cash balance in an asset account by a lender-chosen time period and use the result for qualifying income. This is known as an asset depletion loan.  For example, a $500,000 balance in a liquid asset account may be counted as $4,167 of extra monthly qualifying income with a 10-year asset depletion loan term.  A $1,000,000 balance in a stock brokerage or vested retirement account may be counted as $5,833 of extra monthly qualifying income.  The assets are not touched, but the calculated qualifying income can be used to supplement other traditional income from W-2, 1099, K-1 or retirement sources.
   

• BORROWERS INVESTING IN MULTIPLE RENTAL UNITS
  
  Non-QM loans may be a good choice for investors who own more than 10 financed investment properties — the limit for most conventional lenders. Other non-QM lenders offer debt-service coverage ratio (DSCR) loans for real estate investors. If the rent on the new home covers the monthly payment, you don’t need other income to qualify.
   

• BORROWERS WITH RECENT BAD CREDIT
  
  You may be eligible for a non-QM loan after one day seasoning of  completing a bankruptcy or foreclosure. You typically need to wait two to seven years after a significant credit event for standard loan programs.
  
   

A non-QM loan is similar to hard money loans. However, non-QM loans have substantially lower interest rates versus hard money loans and interest rates on non-QM loans are dependent on the down payment and borrower's credit scores.

Non-QM loans are also considered Portfolio lenders, because they work closely with investor banks that buy and hold the funded closed loans in their privately-held portfolios.  This allows  buyers to finance a real property over the maximum loan amount established by the Federal Housing Finance Agency (Fannie Mae and Freddie Mac agency loans):
 

• Non-QM loans to $5 million

• Portfolio Product loans including pledged assets, asset depletion, DSCR (debt service coverage ratio), Cross Collateralize, Bridge-to Sale

• Super Jumbo loans to $30 million, with cash-out options

• Higher sales prices allow borrowers to purchase property with higher loan limits

• Convenience of one loan for the entire loan amount

• Eligible for primary residence, second home or investment properties

• Fixed-rate or adjustable-rate mortgages (ARM), including interest only options

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If you are interested in non-QM loan options, please contact Lake Tahoe Mortgage.