Non Qualified Mortgages

What Is a Non-QM Loan?

A Non-QM loan, or a non-qualified mortgage, 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. Because of the more flexible qualification requirements, Non-QM loans open up real estate investment opportunities to a broader group of individuals.  Another example is DSCR in which there is no employment verification or income verifcation.  

Non-QM vs. Qualified Mortgage

Non-QM loans are an alternative to qualified mortgage (QM) loans. More specifically, a Non-QM loan is one that is not required to meet the federal government and Consumer Financial Protection Bureau’s (CFPB) guidelines for qualified mortgages.

Qualified Mortgage Requirements

The CFPB has established a set of rules for QM loans to provide more stable borrowing requirements. These are meant to protect borrowers from entering loan agreements that they cannot afford to repay. These stricter regulations were established in 2014 in response to the Great Recession that lasted from 2007 to 2009, during which many borrowers defaulted on their subprime mortgages and were forced into foreclosure. This not only had a long-lasting effect on the economy but damaged many individuals’ credit.
Some examples of Non-QM are DSCR Program, Bank Statements Program, ITIN

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