Updated: Jan 15
You might be a candidate for a NON-QM loan, or Non-Qualified Mortgage Loan, if you do not meet the strict Consumer Financial Protection Bureau's (CFPB) mortgage loan conditions. This type of loan is designed for some rental property investors, borrowers that are self-employed, and those who do not meet conventional loan standards. Stratton Equities can also fit self-employed borrowers into the QM space.
It is also an option for borrowers who have had challenges qualifying for a QM-loan due to credit issues (such as bankruptcy, foreclosures, late payments, or other isolated credit issues) in the past or have an unconventional source of income.
Unlike the traditional income verification mandated for most loans, this type of mortgage loan allows you to be eligible based on alternative methods. NON-QM loans create real estate investment opportunities for a wider array of people due to their more versatile qualification criteria.
A qualified mortgage loan is an “agency” mortgage-backed security. On the other hand, a Non-Qualified Mortgage Loan–considered “non-agency” or “private-label”–is suitable for borrowers with exceptional circumstances or those whose incomes differ from month to month.
Many individuals, including hospitality employees, self-employed business owners, and retirees have fluctuating earnings. This is where NON-QM fills the void by offering dynamic underwriting measures for prudent borrowers with special income conditions.
A prevalent belief is that NON-QM loans are "bad loans" in disguise, and therefore not recommended. The reality is that these kinds of loans have their own set of rules related to QM loans to ensure that NON-QM lenders and borrowers are protected from a high-risk loan. The process of lending NON-QM loans is very similar to that of QM loans, only with a different collection of documents during application.
NON-QM Loans: The Benefits For Borrowers
The key benefit of NON-QM loans is that they offer opportunities to borrowers who would not otherwise meet the mortgage requirement. Non-Qualified Mortgage Loans provide much-needed loan financing for millions of hard-working Americans, including self-employed people and small-business owners who have worked hard to achieve success but are not eligible for QM loans.
Below are some of the benefits Stratton Equities’ NON-QM loans offer to borrowers:
Looser, more versatile underwriting and guidelines
Ability to close faster than a QM loan
Ideal for 1-4 family investment properties
NO-DOC Mortgage Loan: Does not require income verification or tax returns
Self-employed people are top candidates for NON-QM loans
For specific borrowers with unique income sources or a high DTI, a NON-QM loan will enable them to obtain the money they need. NON-QM lenders also set standards for Non-Qualified Mortgage Loan borrowers and need to determine their potential to repay.
This type of mortgage loan is ideal for a wide variety of potential borrowers and can be used to buy commercial and investment assets. It is advisable to contact a certified loan officer to determine your qualification for a NON-QM loan, so they can review your profile to ascertain if this product is perfect for you.
How Stratton Equities Can Help
When you’re ready to explore NON-QM loan options, contact Stratton Equities. Our diversity of programs, lowest private money rates (starting at 4.75%), professional team, and quick loan approval process make us the nation’s leading direct hard money and NON-QM lender for real estate investors.