Qualifying for a mortgage loan isn’t easy.
The Consumer Financial Protection Bureau (CFBP) sets very strict guidelines about income and credit history, and some potential homebuyers (like those that are self-employed, or those that have had credit issues in the past) may find that they simply don’t qualify for a traditional loan.
So, does that mean that your home buying dreams are a bust??
Not at all! There are lots of flexible mortgage loans out there – you just have to find the one that works for you! Here are some buyers that might benefit from a non-qualified mortgage (Non-QM) loan:
- Buyers who are self-employed
Instead of filing countless tax documents to qualify for a loan, self-employed buyers can submit 12-14 months worth of personal or business statements to prove your qualifying income.
- Buyers with a high net worth
If you’ve got a substantial savings account, you could potentially qualify for an asset depletion loan that divides your savings balance into additional qualifying monthly income.
- Buyers looking for multiple income properties
Most investors are limited to 10 financed investment properties, but you don’t want to miss out on a great opportunity to snag property 11, 12 or beyond! Some Non-QM lenders offer debt-service coverage ratio loans to investors if the monthly rent on the new property covers the monthly payment.
- Buyers with questionable credit
If you’ve ever filed for bankruptcy or foreclosure, you may think your dreams of owning a new home are hopeless, but that’s not the case if you’ve got a Non-QM loan! In fact, you may be eligible for a Non-QM loan just days after completing a bankruptcy!
- Buyers from other countries
Maybe you frequently travel to the U.S. for work or fun, and it would be awfully nice to have a home base! A Non-QM loan can help you finance your dream property without requiring a social security number, or proof of U.S. income or credit.
Sounds great, right? But you’re probably wondering, “What’s the catch?”
There are some down sides to Non-QM loans. They generally have higher down payments, interest rates and closing costs. They can also be harder to find than a traditional loan, and some come with risky features like interest-only payments, balloon payments, or longer loan terms that may increase the possibility of default.
That doesn’t mean they’re not worth the risk, but it DOES mean you need to do your homework!
If you’re interested in learning more about flexible mortgage loan options, let’s talk! I’d be happy to put you in touch with an excellent lender so we can get you started on the search for your new home!
