Non-QM mortgages have become a popular solution for savvy real estate investors looking for flexible in required documents, closing dates, or loan terms. The more you learn more a non-QM loan, the easier it is to see why these have become a top choice for experience real estate investors.
What is a non-QM mortgage?
Before we get into why investors are turning to non-QM loans, it’s important to understand what they are. Non-QM mortgages are any of the loans that don’t meet the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) guidelines, which were introduced in the wake of the 2008 financial crisis to protect both lenders and borrowers. These guidelines ensure that lenders verify a borrower’s ability to repay the loan based on strict income and credit requirements.
Non-QM loans, by contrast, allow lenders to assess borrowers in a more flexible way, often considering alternative income documentation, credit profiles, or debt-to-income ratios that don’t fall within the QM guidelines. The increased flexibility can make non-QM loans an attractive option for certain borrowers, especially real estate investors.
There is a common myth that non-QM loans are risky, but they don’t have to be scary. We’re available to answer any of your questions to understand the unique terms of the loan types you are considering to find the one that fits your needs best.
Advantages of a Non-QM Mortgage for Real Estate Investors
Non-QM loans are for both buyers looking for their own residents and investors. So why are real estate investors in particular drawn to them? These are some of the advantages that meet investors’ needs.
Flexible Income Verification
One of the main reasons real estate investors are turning to non-QM mortgages is the flexibility in income verification. Traditional QM loans are going to require borrowers to provide extensive documentation, including pay stubs, W-2s, and tax returns, to verify their income. This requirement can be challenging for real estate investors, many of whom rely on rental income, capital gains, or self-employment income that might not be easily documented.
On the other hand, non-QM loans allow us to consider alternative forms of income verification, such as bank statements, asset-based underwriting, or even projected rental income from the investment property.
Higher Loan Limits
For real estate investors, particularly those focused on high-value properties or large portfolios, conventional mortgages may not always provide sufficient financing. Most of the time, non-QM loans have higher loan limits than traditional mortgages, so if you are looking to purchase luxury homes, commercial properties, or multi-unit residential buildings they can be the better fit. The increased access to capital enables you to pursue more lucrative opportunities without being constrained by the limitations of conventional loan products.
For instance, an investor looking to purchase a multi-million-dollar apartment complex might struggle to secure adequate funding through traditional means, especially if the property doesn’t fit neatly within the guidelines for a conventional loan. However, a non-QM jumbo loan, with its higher loan limits and flexible underwriting criteria, can provide the ideal financing for the investment.
Speed and Efficiency
When you’re looking to buy an investment property, time is often of the essence. The ability to move quickly on a deal can mean the difference between securing a profitable property and missing out on it. Traditional mortgage processes can be slow and cumbersome because of their strict requirements and lengthy approval timelines. In some cases, this delay can be cost you the property altogether.
We are usually able to move more quickly because we have more flexibility in our underwriting process. Without the need to adhere to strict QM guidelines, we can offer faster approval and funding times, which we know is crucial for investors who need to act quickly to capitalize on opportunities.
Where to Apply for a Non-QM Mortgage
When you are looking into a non-QM mortgage, you want a lender with years of experience. These unique financing solutions require expertise, and we have built it up with over 20 years in the industry helping our clients find the mortgage that uniquely suits their needs.
If you want to learn more about applying for a non-QM mortgage, we can help. Contact us any time to learn about how we have helped so many people reach their investment goals by finding creative financing solutions.
