Many homeowners may not fit within the traditional lending guidelines for reasons such as being self-employed income, having a low credit score, or showing low income but significant assets. Just because you may not fit within the traditional guidelines does not mean getting a mortgage is impossible. Non-QM loans fill the gap by allowing lenders to evaluate alternative documentation to assess potential risks and determine your ability to repay the loan.
What is a QM Loan?
To better understand non-QM loans, you must understand what classifies as a QM (qualified mortgage) loan first. QM loans meet the guidelines set forth by the Consumer Financial Protection Bureau (CFPB). The factors a lender commonly reviews to determine if a loan is a qualified mortgage are:
Income and Employment History
A lender will review your pay stubs, tax returns, employment history, and employment verification documents for a qualified mortgage.
Typically, qualified mortgages can not have a debt-to-income ratio that exceeds 43%.
The risk may vary with different loan features. Typically, interest-only loans are not considered qualified mortgages.
What is a Non-QM loan?
A non-QM (non-qualified) loan is a mortgage that does not meet all the guidelines set forth by the CFPB’s rules. Typically, it is any loan that falls outside the guidelines listed above. A lender will use alternative documentation to qualify you for the loan. Non-qualified mortgages may have the following:
If you have inconsistent or non-traditional income, you may not have to submit your tax returns to qualify for the loan.
High debt-to-income ratio
Typically, if the ratio exceeds 43%, it is considered a non-QM loan.
Interest-only loan feature
Who May Benefit from a Non-QM loan?
With the rise of self-employed workers, independent contractors, and real estate investors, more and more homebuyers today qualify for non-QM loans. Non-QM loans may benefit:
Self-employed borrowers may have inconsistent or irregular income.
Real Estate Investors
Real estate investors may have their money tied up in properties rather than liquid cash in the bank.
This refers to borrowers with low credit scores.
International borrowers looking to purchase or invest in real estate in the U.S. may qualify for a non-QM loan.
Borrowers with Significant Liquid Assets
This may refer to those with significant cash in the bank, investment, or retirement accounts but not steady monthly income.
Borrowers with Non-Traditional Income Sources
Independent contractors and freelancers may also have irregular and inconsistent monthly income.
What are the types of Non-QM Loan Programs GuardHill Offers?
GuardHill offers many non-QM loan programs to help borrowers from all walks of life achieve their mortgage financing goals.
Bank Statement Program for Self-Employed Borrowers
Qualifies the borrower based on personal or business bank statements rather than tax returns.
Investment Property Cash-Flow
Qualifies the borrower based on the cash flow or gross rent generated by an investment property instead of tax returns.
Foreign National Loans
Foreign National loans may require different paperwork than a traditional mortgage.
Asset Depletion Mortgages
Qualifies the borrower based on their assets (stocks, bonds, cash, etc.) rather than their tax returns.
Why choose GuardHill for your Non-QM loan?
At GuardHill, we understand that one size does not fit all. That is why we commit to continually expand our product offerings and helping borrowers with different financial backgrounds achieve their homeownership and financing goals. We specialize in working with borrowers who may fall outside of the traditional lending guidelines and understand how to navigate the non-QM financing process to provide a fast, easy, and seamless mortgage experience.