Non-QM Down Payment Requirements Versus Traditional Loans
In this article, we will cover the differences between non-QM down payment requirements versus traditional loans. This blog on Non-QM down payment requirements is an update of an older blog post that we published on bank statement loans which still exists but dozens more non-QM mortgages are now in the marketplace.
Non-QM Mortgage Lenders now has dozens of alternative financing programs called NON-QM loans which are equivalent to non-prime loans back in the day. We will discuss NON-QM down payment requirements versus traditional mortgages in this article. We will be comparing non-QM down payment requirements versus traditional loan programs.
Differences Between Non-QM Down Payment Requirements Versus Traditional Mortgages
HUD, the parent of FHA, is one of the most popular loan programs for first-time homebuyers, borrowers with bad credit, borrowers after bankruptcy, borrowers after foreclosure, and homebuyers with a high debt-to-income ratio. Government and conventional loans have a mandatory waiting period after bankruptcy and foreclosure.
Non-QM Down Payment Requirements After Bankruptcy and Foreclosure
The Non-QM Down Payment Requirements one day after bankruptcy and foreclosure are 30% down payment. Non-QM mortgages have no waiting period after bankruptcy and foreclosure. You can qualify for non-QM loans one day out of bankruptcy and foreclosure whereas you cannot with government and conventional loans.
On non-QM down payment requirements, you need a 30% down payment on non-QM loans one day out of bankruptcy and foreclosure. Government and conventional loans only require a 3% to 5% down payment on a home purchase.
Bank Statement Loans Non-QM Down Payment Requirements Versus Traditional Morgage Loans
All non-QM loans require at least a 20% down payment requirements. Government and conventional loans require a 3% to a 5% down payment requirement.
Waiting Period After Bankruptcy and Foreclosure
The traditional two-year waiting period after foreclosure and the traditional 3-year waiting period after a foreclosure, deed in lieu of foreclosure, and short sale.
There are conditions that mortgage loan borrowers need to follow and abide by. NON-QM Loans at Non-QM Mortgage Lenders are non-traditional loans with no waiting period requirements after bankruptcy and foreclosure.
Basic Guidelines For Non-QM Versus Traditional Mortgages
To qualify for traditional mortgages after bankruptcy and foreclosure, you need to meet the mandatory waiting period after foreclosure or bankruptcy. The waiting period depends on the individual mortgage loan program. Non-QM loans do not have a minimum waiting period requirement after bankruptcy or foreclosure.
The borrower needs to have proof that he or she has re-established his or her credit since the economic event that led to the foreclosure and/or bankruptcy. Show that is now stable with a full-time job and not have had any late payments in the past 12 months. Verification of rent is a must but not a requirement on non-QM loans.
Verification of Rent Guidelines on Mortgages
Rental verification adds a lot of weight to any mortgage application. If you are a renter, you need to pay your monthly rent by check. The mortgage application cannot be started until 30 days after the borrower completes a one-hour HUD-approved housing counseling class. A signed HUD housing course certificate signed by the housing counselor needs to be submitted with the mortgage loan application. NON-QM Loans offered by Non-QM Mortgage Lenders is an alternative form of mortgage loan for borrowers with no waiting period after foreclosure and short sale.
Debt-To-Income Ratios For Non-QM Versus Traditional Mortgages
The higher the debt-to-income ratio the higher the non-QM down payment requirements. The maximum front-end ratios on manually underwritten FHA loans are capped at 31% and the back-end debt-to-income ratios are capped at 43% with zero compensating factors, 37% front-end and 47% back-end with two compensating factors, and 40% front-end and 50% back-end debt-to-income ratio with two compensating factors.
Currently, regular FHA mortgage loans via DU AUS have front-end ratios at 46.9% and back-end ratios at 56.9%. Non-QM loans’ debt-to-income ratio is dependent on the individual non-QM mortgage lender. However, in general, non-QM debt-to-income ratios are capped at 50% debt-to-income ratio.
NON-QM Versus Traditional Mortgages Are an Alternative Form of Home Loan With No Waiting Period
NON-QM Loans is a specialty home loan program where there is no waiting period after a housing event:
- No Waiting Period After Foreclosure
- No Waiting Period After Deed In Lieu Of Foreclosure
- No Waiting Period After Short Sale
- One-Year Waiting Period After Chapter 7 Bankruptcy discharged date
- 10% to 20% down payment on NON-QM Loans
A NON-QM loan is a form of bridge financing where there is no waiting period after a housing event and a one-year waiting period after a Chapter 7 Bankruptcy discharge date. Non-QM Mortgage Lenders is a full-service five-star direct lender with no overlays on government and conventional loans.
Home Buyers who need to know more about non-QM down payment requirements and need to get qualified for NON-QM Loans or government and/or conventional loans with no lender overlays, please contact us at 1-800-900-8569 or text us for faster response. The team at Non-QM Mortgage Lenders is available 7 days a week, evenings, weekends, and holidays by phone or by email at gcho@gustancho.com.
This blog on Non-QM Down Payment Requirements Was UPDATED on November 20th, 2022
