One of the challenging aspects of applying for a loan is making sure you understand all of the terms. While we are always here to answer your questions about your loan application, it might be helpful to check out this post that explains the non-QM loan terms you may not yet know.
We know that the most comfortable and confident investors are those who have all the information they need. Contact us any time with your questions or to secure pre-approval, and keep reading to learn more about these unique loan options that might make your real estate goals more within-reach than you thought!
Non-Qualified Mortgage (Non-QM Loan)
First of all, let’s define what we mean by a Non-QM Loan. It’s the shorthand for non-qualified mortgage, a type of mortgage that does not meet the criteria set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. Non-QM loans are designed to cater to borrowers with unique financial situations that fall outside conventional lending standards, like those who are self-employed or have inconsistent income.
Bank Statement Loan
A bank statement loan is a type of non-QM loan that uses bank statements as a means of verifying income. This option is beneficial for self-employed individuals or those with non-traditional income sources. Rather than providing pay stubs and employment verification, we look at 12 or 24 months of bank statements (personal or professional, depending on the scenario) to see what you can qualify to borrow.
While there are still credit and DTI requirements, this is a great option for those who would not qualify for a conventional mortgage or a government-insured loan option.
A jumbo loan is mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. While jumbo loans can be non-QM, not all jumbo loans fall into the non-QM category. If you think a jumbo loan is the right fit for you, reach out to us to learn more about your options and which type of mortgage is going to be the best for you.
Stated Income Loan
A stated income loan is a non-QM loan where the borrower states their income and assets without providing documentation. There are no tax returns required, and these loans can be ideal for buying or refinancing. This type of loan is often chosen by self-employed individuals or those with irregular income.
Cash Flow Investor Loan
These loans have a few names, including cash flow mortgages and cash flow investor loans, and as the name suggests they are approved based on the cash flow potential of an investment property rather than your personal income. This might be the perfect fit for you if you want to buy an income property and need financing based on the ability of the property to mostly pay for itself.
Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the appraised value of the property. Non-QM loans may have specific LTV requirements based on the type of loan and borrower profile, and we can help you navigate these qualification requirements.
The process of paying off a loan over time through regular, scheduled payments. Some non-QM loans have various amortization structures, including interest-only periods, and we will make sure you understand the unique terms of your loan before you close.