Non-QM Loan

A non-QM loan is a mortgage that does not meet the standards set by the qualified mortgage (QM) rule established by the Consumer Financial Protection Bureau. Non-QM loans may have flexible credit and income requirements, but do come with higher interest rates and fees.

What Is A Non-QM Loan?

Non-QM loans, or “non-qualified” mortgage loans, are mortgage loans that do not meet the standards set by the Consumer Financial Protection Bureau’s “qualified” mortgage rule. This rule established guidelines for mortgage lenders to ensure that borrowers have the ability to repay their loans. Non-QM loans may be an option for borrowers who do not meet the qualifications for a qualified mortgage, such as those with a high debt-to-income ratio or a non-traditional credit history. Non-QM loans may have more flexible underwriting guidelines and may be available to a wider range of borrowers, including self-employed individuals or those with nontraditional income sources. However, non-QM loans may also have down payment requirements and higher interest rates and fees compared to qualified mortgages. If you are unable to qualify for a traditional mortgage loan, a non-QM loan may be worth considering.

The Benefits of Non-QM Loans

  • Flexible income verification options
  • Allows for self-employed and non-traditional income sources
  • Allows for higher debt-to-income ratios
  • Can be used for properties not meeting conventional guidelines

Who Should Consider a Non-QM Loan?

  • Borrowers with non-traditional income sources
  • Borrowers with less-than-perfect credit scores
  • Borrowers who need a larger loan than traditional mortgage limits allow

Eligibility Guide

  • Have a minimum credit score of 550
  • Have a maximum debt-to-income ratio of 50% (no ratio available too)
  • Have a minimum of 1 year of self-employment history
  • Have a verifiable income source ie. bank statements
  • Have a minimum down payment of 20% (depending on occupancy type and property type)

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