More than ten years ago, lots of people stopped making mortgage payments and lost their homes to foreclosure. One reason this happened was that some mortgages let people buy a home they couldn’t really afford. These borrowers could make the payments at first, but eventually they got in over their heads financially.
Today, Non-QM lenders offer alternative financing options that are safe. In 2014, the CFPB (Consumer Financial Protection Bureau) created the Qualified Mortgage Rule to verify a borrower’s ability to repay a mortgage and reduce risk for both parties. Today, any mortgage that does not follow the guidelines for a qualified mortgage is considered to be a Non-QM loan.
The term “non-QM loan” is short for “non-qualified mortgage loan”. A non-QM loan is a home loan that does not fit into the standard guidelines set by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
A Non-QM Loan is a loan that does not fit into the traditional guidelines set by government entities like Freddie Mac or Fannie Mae. These loans are often tailored to specific borrower needs and may have more flexible qualification criteria. While these products may come with higher interest rates, they can be a good option for borrowers who might not otherwise qualify for a conventional mortgage. If you’re thinking of applying for a Non-QM Loan, here are some things to keep in mind:
1. Non-QM Loans often come with higher interest rates than conventional mortgages. This is because they are considered to be higher risk by lenders.
2. Non-QM Loans may have more flexible qualification criteria than conventional loans. This means that you may still be able to qualify for a Non-QM Loan even if you don’t meet all of the traditional requirements.
3. Non-QM Loans are often tailored to specific borrower needs. This means that the terms and conditions of the loan may be different than what you would find with a conventional mortgage.
Types of NON-QM Loans
Lenders who offer non-QM loans are taking on more risk, since these loans do not have the same government backing as QM loans. As a result, borrowers who take out non-QM loans may have to pay higher interest rates and/or provide additional documentation to prove their ability to repay the loan. There are several types of non-QM loans available, each with its own set of eligibility requirements.
1. Alt-A Loans
Alt-A loans are for borrowers with good credit but who don’t meet the standard income or asset requirements for a conventional loan. Alt-A loans typically have higher interest rates than conventional loans. To qualify for an Alt-A loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
2. Balloon Mortgages
A balloon mortgage is a type of loan that requires borrowers to make payments for a set period of time (usually 5-7 years) and then pay off the remaining balance in one lump sum. Balloon mortgages typically have lower interest rates than conventional loans, but the monthly payments may be higher. To qualify for a balloon mortgage, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
3. Interest-Only Loans
An interest-only loan is a type of loan that allows borrowers to make payments only on the interest for a set period of time (usually 5-7 years). At the end of the interest-only period, borrowers must then begin making payments on both the principal and the interest. Interest-only loans typically have lower interest rates than conventional loans, but the monthly payments may be higher. To qualify for an interest-only loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
4. Portfolio Loans
A portfolio loan is a type of loan that is held by the lender, rather than being sold to investors. As a result, portfolio loans typically have looser eligibility requirements and lower interest rates than conventional loans. To qualify for a portfolio loan, borrowers usually need a credit score of 620 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
5. Private Money Loans
Private money loans are funded by private investors, rather than traditional lenders like banks or credit unions. Private money loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a private money loan, borrowers usually need a credit score of 620 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
6. Subprime Loans
Subprime loans are for borrowers with poor credit ( typically below 600). Subprime loans typically have higher interest rates than conventional loans. To qualify for a subprime loan, borrowers usually need a credit score of 580 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
7. Hard Money Loans
Hard money loans are for borrowers with poor credit ( typically below 600). Hard money loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a hard money loan, borrowers usually need a credit score of 580 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
8. No Doc Loans
A no doc loan is a type of loan that does not require borrowers to provide documentation of their income or assets. No doc loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a no doc loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
9. Stated Income Loans
A stated income loan is a type of loan that does not require borrowers to document their income. Stated income loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a stated income loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
10. Bridge Loans
A bridge loan is a type of loan that is used to finance the purchase of a new home before the sale of the borrower’s old home is complete. Bridge loans typically have high interest rates and short terms (usually six months to one year). To qualify for a bridge loan, borrowers usually need a credit score of 620 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
11. portfolio loans
A portfolio loan is a type of loan that is offered by a lender that holds the loan in its own portfolio rather than selling it on the secondary market. Portfolio loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a portfolio loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
12. Super Jumbo Loans
A jumbo loan is a type of loan that is for a larger amount than what Fannie Mae and Freddie Mac will finance. Jumbo loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a jumbo loan, borrowers usually need a credit score of 720 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
13. Construction Loans
A construction loan is a type of loan that is used to finance the construction of a new home. Construction loans typically have high interest rates and short terms (usually six months to one year). To qualify for a construction loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
14. Lot Loans
A lot loan is a type of loan that is used to finance the purchase of a lot on which to build a new home. Lot loans typically have high interest rates and short terms (usually six months to one year). To qualify for a lot loan, borrowers usually need a credit score of 620 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
15. Manufactured Home Loans
A manufactured home loan is a type of loan that is used to finance the purchase of a manufactured home. Manufactured home loans typically have higher interest rates and fewer eligibility requirements than conventional loans. To qualify for a manufactured home loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
16. Hard Money Loans
A hard money loan is a type of loan that is backed by the value of the property, not by the borrower’s creditworthiness. Hard money loans typically have high interest rates and short terms (usually six months to one year). To qualify for a hard money loan, borrowers usually need a down payment of 30% or more. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
17. Home Equity Lines of Credit (HELOCs)
A home equity line of credit (HELOC) is a type of loan that is backed by the equity in the borrower’s home. HELOCs typically have variable interest rates and can be used for a variety of purposes, such as home improvements, debt consolidation, or investments. To qualify for a HELOC, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
18. Home Equity Loans
A home equity loan is a type of loan that is backed by the equity in the borrower’s home. Home equity loans typically have fixed interest rates and are used for a variety of purposes, such as home improvements, debt consolidation, or investments. To qualify for a home equity loan, borrowers usually need a credit score of 680 or higher and a debt-to-income (DTI) ratio below 45%. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
19. Reverse Mortgages
A reverse mortgage is a type of loan that allows homeowners to borrow against the equity in their home. Reverse mortgages typically have high-interest rates and are only available to homeowners who are 62 years of age or older. To qualify for a reverse mortgage, borrowers must be 62 years of age or older and have equity in their home. Borrowers may also be required to provide additional documentation, such as bank statements or tax returns, to prove their ability to repay the loan.
20. Mortgage without tax return
Mortgages without tax returns are a specialized type of home loan that allows borrowers to qualify without providing any documentation of their income. This can be a helpful option for self-employed borrowers or those who have difficulty documenting their income. While these loans typically come with higher interest rates and require a larger down payment, they can be a good option for borrowers who might not otherwise qualify for a mortgage.
If you’re thinking about applying for a mortgage without tax returns, here’s what you need to know. If you’re self-employed or have difficulty documenting your income, a mortgage without tax returns may be a good option for you. Just keep in mind that you’ll likely need a higher credit score and will pay a higher interest rate than someone who is able to provide tax return documentation.
21. Asset Depletion Mortgage
An asset depletion mortgage is a type of home loan that allows borrowers to use their liquid assets to qualify for a loan, instead of using their income. How it works: The borrower’s total liquid assets are divided by the number of months left in their working years to calculate a monthly payment amount. This monthly payment amount is then used to qualify the borrower for a loan.
For example, if a borrower has $100,000 in liquid assets and 30 years left until retirement, their monthly payment amount would be $3,333. This monthly payment amount is then used to qualify the borrower for a loan. Who can benefit: Asset depletion mortgages can be beneficial for retirees or those who are self-employed and have irregular income.
This type of mortgage can also be beneficial for those who have a high net worth, but low income. An asset depletion mortgage can provide borrowers with the opportunity to buy a home that they may not otherwise be able to afford. This type of mortgage can also help borrowers to avoid private mortgage insurance (PMI).
22. Bank statement
A bank statement mortgage is a type of home loan that allows borrowers to qualify using bank statements instead of traditional documentation like pay stubs and tax returns. This can be a great option for self-employed borrowers or anyone with irregular income. If you’re thinking of applying for a bank statement mortgage, here are some things you need to know.
A bank statement mortgage is a type of home loan that allows borrowers to qualify using bank statements instead of traditional documentation like pay stubs and tax returns. This can be a great option for self-employed borrowers or anyone with irregular income. With a bank statement mortgage, lenders will consider your personal or business bank statements to verify your income. This is a different approach from the traditional method, which requires documentation like pay stubs and tax returns.
23. ITIN Loans
An ITIN mortgage is a specific type of home loan available to those who do not have a Social Security Number (SSN). Individuals with an Individual Taxpayer Identification Number (ITIN) can use this type of mortgage to finance the purchase of a primary residence in the United States.
There are several lenders that offer ITIN mortgages, and the qualification requirements can vary. In general, borrowers will need to have a good credit history, documented income, and a down payment of at least 10%. If you’re thinking of applying for an ITIN mortgage, here are some things to keep in mind:
- You’ll need to provide documentation of your income. This can include tax returns, pay stubs, and/or bank statements.
- Your credit history is important. Lenders will want to see that you have a good history of making on-time payments.
- A down payment of at least 10% is typically required.
24. High DTI Mortgage
A high DTI mortgage is a mortgage with a high debt-to-income ratio. This means that the borrower has a high amount of debt relative to their income. This can make it difficult to make monthly payments and can lead to foreclosure if the borrower is unable to make payments. A high DTI mortgage is often considered to be risky and may have higher interest rates than other types of mortgages.
There are some ways to improve your chances of being approved for a high DTI mortgage, such as having a strong credit score and a stable job history. If you’re considering a high DTI mortgage, it’s important to understand the risks involved.
25. LLC Mortgage
If you’re thinking about taking out a mortgage to purchase property for your LLC, there are a few things you should know first. In this blog post, we’ll discuss what an LLC mortgage is, how it differs from a traditional mortgage, and some of the pros and cons to consider before making a decision. An LLC mortgage is a loan that is taken out by a limited liability company (LLC) to purchase the property.
The property can be used for business purposes or as an investment, but it must be owned by the LLC. The loan is secured by the property and the LLC is responsible for repaying the loan. The biggest difference between an LLC mortgage and a traditional mortgage is that the LLC is responsible for the loan, not the individual members of the LLC.
This means that if the LLC defaults on the loan, the members’ personal assets are not at risk. Another difference to be aware of is that LLC mortgages often have higher interest rates than traditional mortgages. This is because lenders view LLCs as high-risk borrowers. The higher interest rate compensates the lender for this risk.
26. Mortgage After Foreclosure
Foreclosures can be very stressful and difficult to deal with. After a foreclosure, it may seem like there is no way to get another mortgage. However, this is not true. There are plenty of options available for those who have gone through foreclosure. One option is to apply for an FHA loan.
The Federal Housing Administration (FHA) offers loans to those who may not qualify for a traditional loan. This could be a good option for those who have gone through foreclosure. Another option is to apply for a VA loan. The Department of Veterans Affairs (VA) offers loans to veterans and their families. This could be a good option for those who have served in the military or their families.
