![]() Some mortgages did not verify income at all. Why do these regulations exist? In the years leading up to the Great Recession, lenders seemed willing to approve mortgages for anyone with a pulse, including those with poor credit and low down payments. These minimum standards for qualified mortgages are part of the 2010 Consumer Protection Act and Dodd-Frank Wall Street Reform Act. The above regulations also protect buyers from risky loans. If you can't tick all of the above boxes, you'll need to look into non-qualifying mortgages.Įssentially, mortgage lenders need to know you have the ability to repay your loan. Loan term: The loan term must be 30 years or less.No risky loan features: Risky features include interest-only loans (where you only pay interest without reducing the principal), negative amortization (where your principal can increase, even while you are making payments), or balloon payments (where a larger payment can be tacked on to the end of the loan).Limits on fees: Points and fees on your loan cannot exceed 3% of the loan amount.This is the amount of your monthly income that goes toward your existing debts. Debt: Your debt-to-income ratio (DTI) must be 43% or less.Income: You must have verifiable income, including pay stubs, W-2s, and tax returns.To qualify for a traditional mortgage, you must meet these requirements: The best way to understand a non-qualifying mortgage is to look at the criteria for traditional, qualifying mortgages. 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-qualified mortgages. Choose Lend Smart.A non-qualified mortgage (non-QM) is a home loan designed to help home buyers who can't meet the strict criteria of a qualifying mortgage. For loans that are in the larger range, say five, six, seven, hundred thousand.As always, if you have any questions on these and any other mortgage topics, contact one of our mortgage professionals at the number on the screen.Īnd as always, be smart. On what would be considered the A-paper side, there’s a little more expanded guidelines on the non-qualified loan area. Those loans are a little bit harder to qualify for. That’s the amount Fannie Mae and Freddie Mac set forth for the conventional loan limits. Perhaps you’re looking for a larger loan size, something in the jumbo category, which would be a loan that is over $510,400 (647,200 in 2022). One more reason we do non-qualified mortgages. If you’ve had a foreclosure in even the last year on a non-qualified mortgage loan, we could get you a loan right away instead of having to wait seven years as you would on a conventional mortgage. Or perhaps you had a foreclosure in your recent past. ![]() Non-QM Loans for Bankruptcy and ForeclosuresĪnother reason you might be interested in a non-qualified mortgage is that they have different parameters on your bankruptcy seasoning. Or perhaps you want to buy an investment property, and you’d like to qualify using just your lease income for that particular property in a non-qualified loan space. There are some loans on the non-qualified mortgage side that you can qualify using your bank statements, so your monthly deposits for your business. Perhaps you are self-employed, and your tax returns don’t have quite enough income to qualify for a mortgage. So for a non-qualified mortgage, these are mortgages that maybe sit just outside the box of a normal mortgage. Some parameters for a qualified mortgage are less risky loan characteristics, such as no interest-only mortgages, no mortgages that have a prepayment penalty, and no mortgages that have negative amortization, which means when you make your payment, your balance of your mortgage increases each month. What is are some characteristics of a Non-Qualified Mortgage The CFPB, which stands for the Consumer Finance Protection Bureau, has set forth some guidelines about what a qualified mortgage is. Today we’re going to talk about what is a Non-QM Loan, which stands for a non-qualified mortgage. And today, we’re here for another episode of Mortgage Q and A. Hello, I’m Eric Peterson, secondary marketing manager at Lend Smart Mortgage.
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