Summit Mortgage Banker, Inc
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Non-QM Loans

A Non-QM mortgage (Non-Qualified Mortgage) is a type of home loan that does not meet the standard requirements set by the Consumer Financial Protection Bureau (CFPB) for a Qualified Mortgage (QM). These loans are designed for borrowers who may not fit traditional lending criteria but can still demonstrate the ability to repay the loan.

Key Features of Non-QM Mortgages:

  • Flexible income documentation: Often used by self-employed borrowers or those with irregular income who may not have W-2s or traditional pay stubs.
  • Higher debt-to-income (DTI) ratios: May exceed the typical 43% DTI limit. Up to 50% in some cases
  • Alternative credit standards: May allow for lower credit scores or past credit issues.
  • Interest-only or balloon payments: Some Non-QM loans allow for features not permitted in Qualified Mortgages.
  • Not eligible for purchase by Fannie Mae or Freddie Mac: These are typically held by private investors.

Common Non-QM mortgage programs 

Below are common Non-QM loan programs available in the market. 

  • Designed for Self-employed borrowers.
  • Income Verification: 12 or 24 months of personal or business bank statements.

  • Designed for investors purchasing or refinancing rental properties.
  • Income Verification: Debt-Service Coverage Ratio, based on property cash flow, not personal income.

  • Designed for retirees, high-net worth individuals with substantial liquid assets.
  • Income Calculation: based on liquid assets (e.g.; stocks, bonds, savings) divided over a period (e.g.; 60, 84 or 120 months).

  • Designed for wage earners who do not have formal paystubs and W2s, or individuals with irregular pay structure such as tips, seasonal income.
  • Income Verification: employment verification form completed by employer.

  • Designed for independent contractors (e.g., realtors, consultants, Uber drivers).
  • Income Verification: one or two years of 1099 forms.

  • Designed for borrowers without social security numbers, or undocumented immigrants.
  • Documentation: ITIN, proof of income, typically with alternative credit verification.