Non-Qualified Mortgage (Non-QM) loans are typically for borrowers with unique income qualifying circumstances. There are millions of people who may have the income but don't qualify with their tax returns, W-2s or pay stubs alone.
Many people have fluctuating incomes, lump sum incomes or are self employed such as independent business owners, entrepreneurs, contractors, hospitality workers, retirees, actors, artists, musicians, etc.
What Is a Non-QM Loan?
How Do Non-QM Mortgages Work
Non-QM loans can fill the niche for those who don't necessarily fit into the "qualified-mortgage box." A qualified mortgage follows rules set by the CFPB and Federal Government; however, a Non-QM loan use alternate methods of income verification to help you get approved for a mortgage loan.
What a Non-QM Loan Is Not:
- It is not a subprime mortgage
- It is not a "stated-income" loan
What a Non-QM Loan Is:
- A home financing solution for responsible borrowers with unique financial circumstances
- A flexible home loan that covers a variety of consumer needs
Types of Income Verification Methods Allowed for Non-QM Loans:
Full Documentation (same as qualified mortgages)
One-Year Tax Return Program
- Amortizing borrowers must be self employed for two years
- Personal tax returns for 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
Bank Statement Program
- 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
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
Non-QM Loan Benefits
- Ideal for self employed and or people with non-traditional financial circumstances
- Alternative income verification methods accepted
- Multiple fixed and adjustable loan options are available
- Loan maximum is as high as $2.5 million
- Cash out may be as high as $500,000
- Second homes and investment properties may be eligible
A New American Funding Loan Officer can assess your individual employment, asset and income profile to determine if this product is right for you. It fits a broad range of potential consumers so speak with a lending professional to determine your eligibility today.
Non-QM Home Loan Options
The Non-QM loan can be used for a rate-and-term refinance, a cash out refinance, a new home purchase for owner-occupied or second homes.
Give us a call to learn more about how a Non-QM loan might be the right home financing solution for you.