Non-QM Loans (Non-Qualified Mortgage)

Many homeowners may not fit within the traditional lending guidelines for reasons related to income, employment, or credit. If you do not fit within the conventional lending guidelines, that does not mean getting a mortgage is impossible. Non-QM loans fill the gap by allowing lenders to qualify borrowers based on alternative documentation.


What is a Non-QM Loan?

A non-QM loan, also known as a non-qualified mortgage, is a mortgage that does not meet all the guidelines set forth by the Consumer Financial Protection Bureau’s (CFPB) rules. Typically, a non-qm loan is for those with volatile income and high debt-to-income ratios. The mortgage underwriter will review the alternative documentation to assess potential risk and determine your ability to repay the loan. – not sure if we need this here since we state it below.


Qualified vs. Non-Qualified Mortgage

A qualified mortgage meets the guidelines set forth by the CFPB. The main differences between qualified and non-qualified mortgages include:

Income and Employment Documents

The mortgage underwriter will review the borrower’s pay stubs, tax returns, employment history, and employment verification documents for a qualified mortgage. Borrowers with inconsistent or non-traditional income may not have to submit tax returns to qualify for a non-qualified mortgage. Instead, they will provide alternative documentation to showcase their income.

Debt-to-Income Ratios

Mortgage lenders evaluate your debt-to-income ratio to determine how much additional debt you can handle based on your monthly cash flow. Qualified mortgages typically require the borrower to have a debt-to-income ratio of below 43%. Thus, if your ratio exceeds 43%, you may qualify for a non-qm loan.

Interest-Only Loan Feature

Interest-only loans may be considered riskier than traditional mortgages. Thus, qualified mortgages may not offer interest-only programs.


Benefits of Non-QM Loans

One of the main benefits of a non-qm loan is that it provides greater underwriting flexibility, which gives the borrower more options.

Groups of people who may benefit from a non-qm loan include:

  • Self-employed borrowers
    • Those with irregular or inconsistent income
  • Real estate investors
    • Those with money tied up in properties rather than liquid cash in the bank
  • Borrowers with significant liquid assets
    • Those with large amounts of cash in the bank, investment, or retirement accounts but do not show steady monthly income
  • Independent contractors or freelancers
    • Borrowers with irregular or inconsistent income, as well


GuardHill’s Non-QM Loan Programs

GuardHill offers many non-qm loan programs to help borrowers from all walks of life achieve their mortgage financing goals.

Bank statement program

This program allows the self-employed borrower to qualify for the loan based on personal or business bank statements rather than personal tax returns.

Investment property cash-flow

This program qualifies the borrower based on the cash flow or gross rent generated by an investment property instead of personal tax returns.

Foreign national loans

Buyers purchasing property in the U.S.

Asset depletion mortgages

This program qualifies the borrower based on their assets (stocks, bonds, cash, etc.) rather than their tax returns.


Why Choose GuardHill?

GuardHill has over 29 years of mortgage financing experience and specializes in providing standard and out-of-the-box financing solutions for our customers. GuardHill works with numerous investors and lenders and offers various loan programs to provide borrowers with the best financing solutions possible.