Self-employed and looking for a mortgage? A Non-Qualified Mortgage (Non-QM) loan is an option to consider.
A Non-QM loan lets the borrower provide alternative proof of income for lenders to consider in lieu of tax returns, W-2s or pay stubs alone. But who makes a good candidate for a Non-QM loan? As you weigh the possibilities, here are some Non-QM loans that might be for you.
Asset Verified Loans
True to its name, an Asset Verified loan requires you to provide asset statements to verify your ability to repay the loan. Assets that are considered for qualification include retirement accounts, stocks and bank accounts. In addition, most lenders will want to see a certain amount of reserves—often 6 months—in your savings account to help you make your mortgage payments in the event you have a financial hardship.
For high-net worth borrowers without a consistent income, the loan max is as high as $2.5 million. This type of Non-QM loan helps the borrower to maintain a positive cash flow rather than just buying a home in cash. It’s often for owner-occupied properties and may require a larger down payment.
With an interest-only loan, only the interest on the loan is initially repaid (and not the principal) during a specified period of time set by the lender. These loans allow you more control over your cash flow and can be fixed-rate or adjustable. With a fixed-rate interest-only loan, your mortgage payment only changes on the principal loan amount. With an adjustable-rate interest-only loan, your introductory loan period is comprised of lower interest-only payments. Once the introductory period is over, your interest rate will rise, plus you will be responsible for making the payments on your loan principal.
It should be noted that by making monthly payments toward the principal during the introductory period, you can actually lower your payments over the life of a fixed-rate or adjustable-rate interest-only loan.
Investment Property Loans
If you don’t have the traditional sources of income for a Qualified Investment Property loan, a Non-QM Investment Property loan can be applied for with bank statements and other alternative forms of income. This loan helps to keep your assets liquid rather than pouring all your cash into a real estate purchase. However, credit score and asset verification requirements still must be met.
Is a Non-QM Loan in Your Future?
No matter what Non-QM loan that you are considering, a New American Funding Loan Officer will be glad to assist you with more information. They can help you find a loan that works for your unique situation—even if it doesn’t meet the traditional loan guidelines. For more information, give us a call today!