My Loan Officer
  • Loading...

Self-Employed? Here's How to Get a Non-Qualified Mortgage Loan

Non-Qualified Loan

Are you self-employed and looking for a mortgage or you want to refinance an existing one? Many in this situation have found it challenging to secure a loan without the usual proof of income that most lenders require during the mortgage approval process. With these extenuating qualification circumstances, a Non-Qualified Mortgage (Non-QM) loan is certainly an alternative to be optimistic about. However, it’s important to know how to get one first.

Learn More

Verifying Employment

In order to process a Non-QM loan, proof of self-employment is still required. This proof can be in the form of a copy of your business license or a letter from your CPA on their letterhead confirming that they handle your business finances and you’ve been self-employed for at least two years.

Showing Your Worth

Not your typical loan (which is known as a qualified mortgage), a Non-QM loan offers an alternative way for a borrower to verify that they will be able to afford their mortgage payments. In lieu of the standard methods of income proof such as tax returns, W-2s or paystubs, this type of loan gives the self-employed borrower a way to show their income, which may be harder to document because it can fluctuate or be in the form of a lump sum, commission or bonuses.

A Non-QM loan factors in the borrower’s credit history and asset statements (which may include a receipt of income from the borrower’s self-owned company in their bank account) to determine whether they can be approved for a Non-QM loan.

Other Forms of Income Verification

A high credit score, a low debt ratio and 6-12 months of available money (what lenders call “reserves”) for mortgage payments are all compensating factors for lenders to do business with an individual wanting a Non-QM loan. It also helps if the borrower has a housing history with no late payments over a few years, as well as no collections or judgments on their credit report.

Self-employed borrowers can appreciate that instead of the usual required documents, a lender like New American Funding can verify self-employed income with the help of bank statements. This program relies on the following:

  • Personal or business statements
  • 100% of eligible deposits from personal and business accounts
  • Profit and Loss statement required for 12 months or previous year and YTD

In addition to bank statements, these types of income verification methods are factored in for Non-QM Loans:

Full Documentation (same as qualified mortgages)

One-Year Tax Return Program

  • Personal tax returns for the past year, including all schedules and attachments
  • Business tax returns for same year with all schedules
  • Signed business profit and loss statement in many cases

Asset Depletion (purchase or rate-and-term refinance only, owner-occupied or second homes)

  • 60-day account history required
  • 100% of vested retirement for borrowers over 59 ½ years old and 50% of vested retirement assets if borrowers are under 59 ½ years old
  • Used 3% rate of return on assets amortized over seven years

You’ve Got Options…

The Non-QM loan can be used for a rate-and-term refinance, a cash-out refinance, and a new home purchase for owner-occupied or second homes.

Give New American Funding a call today to learn more about how a Non-QM loan might be the home financing solution you’ve been looking for at a time you need it the most.

Get Started

How low will your payment be?

Important Updates:  We have updated important provisions in our Terms of Use and Privacy Policy, including cookies and session recording. By using our site, you agree to our Terms of Use and acknowledge that you have read our Privacy Policy.  Click here for more information.