Non-QM Loans
Many homebuyers do not have the standard or consistent forms of income that are typically required by mortgage lenders. Yet, while they may not be able to qualify for conventional loans for various reasons, these buyers may still have enough income or assets to afford homeownership.
In these situations, a non-qualified mortgage (non-QM) may be the solution. These loans use alternate methods to verify income and take a more holistic approach to your financial situation.
What is a Non-QM Loan?
In order to reduce risk of loss after the mortgage meltdown in 2008, federal regulators tightened borrower requirements on mortgage loans that could be backed and bought by government agencies. Loans that meet all the new criteria are called "qualified mortgages." Any loan that falls outside of those qualifications is called a "non-qualified mortgage" or non-QM.
A non-QM is a mortgage loan that uses alternate methods to verify income to qualify borrowers. Even though these loans do not meet the standard requirements, they are not necessarily riskier loans. All borrowers are still required to prove their ability to repay the loan.
Who Do Non-QM Loans Help?
Non-QM loans are often a good fit for those who have unique income situations:
- Self-employed borrowers: Individuals with irregular income or multiple income sources may qualify using alternative documentation, including bank statements rather than traditional tax returns. Learn more about our bank statement mortgage loans in Maryland.
- Borrowers with considerable assets: Buyers who prefer financing over cash purchases to maintain positive cash flow
- Real estate investors: Those who buy homes to flip for profit or turn into rental properties
- Foreign buyers: International borrowers without U.S. credit scores but with high income and substantial assets
- Buyers with blemished credit: Those with sufficient income but credit issues like prior bankruptcy or foreclosures
Documentation Requirements
The documents required vary greatly based on your financial situation. To verify income, you can provide personal and business tax returns, bank statements, or investment account statements. In some cases, income verification may not even be necessary. Non-QM loans take a more holistic approach to your financial situation rather than relying on standard underwriting criteria.
Non-QM mortgage rates and terms vary based on the loan program, borrower qualifications, property type, and market conditions. While these loans may have different pricing and documentation requirements than conventional mortgages, they can provide financing options for borrowers whose financial circumstances do not fit traditional lending guidelines.
Non-QM Loans in Maryland
Redwood Mortgage Services helps qualified borrowers in Annapolis, Anne Arundel County and throughout Maryland explore Non-QM financing when traditional mortgage guidelines may not fit their financial circumstances.
Whether you're self-employed, have substantial assets or are financing an investment property, we can help you review available loan programs and understand the documentation and qualification requirements that may apply.
Redwood Mortgage Services also serves borrowers in Delaware, Virginia, Washington, DC, North Carolina and Florida.
Flexible Income
Qualify using alternative documentation instead of W-2s and tax returns
No Mortgage Insurance
Many non-QM loans do not require Private Mortgage Insurance (PMI)
Entity Lending
Loans can be made to legal entities like family trusts
Looking for a Non-QM Mortgage Loan?
Non-QM loans provide mortgage funding for those with non-traditional income or financial situations. Depending on the loan program and borrower qualifications, Non-QM financing may be available for primary residences, refinancing, cash-out refinances, and investment properties. Fixed-rate and adjustable-rate options may be available. Closing timelines vary based on the lender, documentation requirements, and individual transaction.