A non-qualified mortgage loan, also known as Non-QM, will become increasingly popular with the current housing conditions. Non-QM loans and original mortgage loans have some distinct differences. We will answer the following:
- What is a non-QM loan?
- How is a non-QM different from a traditional mortgage loan?
- What are the benefits of non-QM loans?
A non-qualified mortgage loan is one that does not comply with the requirements set forth by the Consumer Financial Protection Bureau (CFPB) and/or the standards set by the federal government. Therefore, Non-QM loans are not sold by entities such as Fannie Mae or Freddie Mac. Contact us to find out about the Non-QM loan products we offer!
What Is The Purpose of Non-QM Loans
Every borrower’s financial situation is unique. Non-QM loans are important for making homeownership possible for those who do not qualify based on traditional government guidelines (verifiable income, low debt-to-income ratio, limits on fees, no risky loan features, and loan term). If a borrower does not meet all the above requirements, a non-QM loan could be a viable solution. It is a MYTH that non-QM loans are not successful loans. They are great options for those who do not traditionally qualify for a mortgage based on government guidelines.
How Do They Differ from Original Mortgage Loans
Traditional mortgage loans adhere to the Fannie Mae and Freddie Mac guidelines. There is typically stricter income, debt-to-income, credit history, credit score, and down payment requirements. This is to ensure the homebuyer will be able to repay the loan. With a Non-QM loan, the following is possible:
- Buyers with lower credit scores could qualify for a mortgage. *
- Requires less stringent income documentation.
Who May Benefit from Non-QM Loans
To find out if you may benefit from a non-QM loan, contact us today! Typically, investors, foreign nationals, and self-employed homebuyers may consider a non-QM loan for their homebuying solution. This product is also valuable to borrowers with foreclosures, low credit scores, or previous bankruptcies.
*Eligibility and approval is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Direct Mortgage Loans, LLC is licensed in Maryland. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. Equal housing lender.*