Non-QM Mortgage Requirements on Primary and Investments
In this blog, we will cover and discuss the non-QM mortgage requirements on owner-occupant, second homes, and investment properties. We will go into why non-QM loans are becoming increasingly popular and the non-QM mortgage requirements. Non-QM loans are not hard money loans or mortgages for just bad credit mortgage borrowers.
Many borrowers with great credit and high net worth benefit from non-QM loans. DSCR mortgage loans are one of the most popular non-QM loan programs in the nation. In the following paragraphs, we will be covering the various non-QM mortgage requirements on the various non-QM mortgage loan programs in today’s marketplace.
What Are Non-QM Loans?
Non-QM loans are a great alternative to traditional loans for many reasons. After the 2008 Real Estate Crash, the whole mortgage industry went through a major overhaul. Bank Statement Loans for self-employed borrowers were discontinued. Dodd-Frank Was created and implemented. The CFPB was created and became one of the most powerful regulators in the nation.
Strict Mortgage Fraud rules and regulations were implemented. No doc, stated income, or bank statement loans were discontinued. Loan Limits were set on government and conventional loans. Jumbo Mortgages were next to impossible to qualify for. Housing values dropped more than 30% to 50% in many parts of the country.
Housing Market and Home Loan Programs Today
The housing market has been on fire and appreciating for the past several years. After President Donald J. Trump got elected to the highest office of the land and replaced the ex-community organizer with no business experience, the economy skyrocketed. Unemployment numbers are at a historical low of 3.7%. The stock market is at a historical high. President Trump has reduced taxes for the middle class and the tax cuts have a powerful positive effect on our economy. The Trump Administration has wiped out senseless mortgage regulations created by Democrats led by far-left liberal Elizabeth Warren and her team.
Good and Bad News For Housing Market
There are great news and bad news on the housing front today. Housing prices have recovered and not too many homeowners have underwater mortgages. Homeowners are enjoying their sudden home appreciation. Home prices have been increasing year after year since 2012 and there are no signs of a housing correction. Due to rising home prices, both HUD and the FHFA have increased loan limits two years in a row.
Is It Good To Buy a House During a Period of Surging Inflation
The bad news is mortgage rates are the highest since the Housing Bubble Crash of 2008. Despite the higher mortgage rates, demand for housing has not slowed. There is more demand for homes than in inventory.
Home Builders are breaking record sales year after year. Higher home values and interest rates are affecting new home buyers. Many cannot purchase a home of their choice due to exceeding the loan limits. The great news is that Non-QM Mortgage Lenders is offering Non-QM mortgages.
NON-QM Loans And NON-QM Mortgage Requirements
NON-QM Loans are alternative loan programs that do not have to meet government and/or conforming lending guidelines.
Waiting Period non-QM Mortgage Requirements
Here are the NON-QM Mortgage Requirements:
- No waiting period after housing event and/or bankruptcy
- Credit scores down to 500 FICO
Down Payment Non-QM Mortgage Requirements
Non-QM Mortgage Requirements on down payment is anywhere between a 10% to 30% down payment on home purchases:
- The down payment is dependent on borrowers’ credit scores
- Mortgage Rates are dependent on borrowers’ credit scores and down payment
Private Mortgage Insurance Requirements
No private mortgage insurance is required on all Non-QM and bank statement loan programs for self-employed borrowers:
- Maximum 55% Debt to Income ratio
- No need to worry about loan limits up to $3 million loan amount
Non-QM Mortgage Loans With No-Income Documentation Requirements
Non-QM Mortgage Lenders offers non-QM loans with no income tax returns required. One of the most popular mortgage programs is the bank statement loan program for self-employed borrowers. Tax returns are often an issue with self-employed borrowers due to large write-offs. NON-QM Loans are both for owner-occupant, second homes, and investment home financing. Can Buy 5 houses all at once in our portfolio loan program for real estate investors.
Case Scenarios on NON-QM Loans
I have had clients that want to purchase a house that exceeds the loan limit for a conventional $647,200. Any home loan that is greater than $647,200 is considered not conforming and/or Jumbo Loans. Non-QM allows borrowers to put 10% percent down with no PMI.
90 LTV Non-QM Jumbo Mortgage Loans
Homebuyers of higher-end homes can qualify for 90% LTV Jumbo Loans With No Mortgage Insurance with Non-QM Mortgage Lenders NON-QM Mortgage Requirements are set by individual lenders. Non-QM Mortgage Requirements can be negotiated versus agency guidelines. Borrowers with higher loan-to-value or recent housing events and/or bankruptcy are eligible for Non-QM loans.
Let’s say you have a house that will not pass an FHA appraisal due to FHA appraisals being very strict. Conventional only allows you to go to 50% DTI. DTI or debt-to-income ratio is the total debt including the new mortgage divided by the borrower’s gross monthly income. Non-QM loans can go to 55% DTI.
Bank Statement Loans With No Tax Returns
Self-employed borrowers who cannot show qualified income due to tax returns having too many deductions can benefit from our NON-QM Bank Statement Loan Program For Self-Employed Borrowers. Well, this is the most popular use of NON-QM loans. There are 3 main uses of NON-QM loans for borrowers in this situation.
1099 Only Non-QM Mortgage Loans
One main NON-QM Mortgage Requirements for our no-income tax return program is borrowers need to be self-employed or 1099 for the last 2 years. For self-employed borrowers here are the 3 main uses and NON-QM Mortgage Requirements.
Personal Bank Statement Program NON-QM Mortgage Requirements
Self-employed borrowers can qualify for bank statement loan programs with personal bank statements:
- We need to see the last 12 months of personal bank statements
- We will average deposits over the last 12 months in monthly terms
- The average will be the income we use per month to calculate DTI
- Note that some deposits may not be counted due to it being a transfer from another account you may have
- Borrowers who qualify with this income then no tax returns, no 1099s, and no w2s are required
Making this a lite doc loan.
Business Bank Statement NON-QM Mortgage Requirements
Business Bank Statement Program. This is similar to the Personal Bank statement Program. It has one major difference from the personal bank statement loan program. We will hit borrowers for an expense ratio of the average income per month. The expense ratio is assuming borrowers have business expenses. We will do a deduction for this expense as an ongoing incurring monthly expense.
If your accountant can provide a letter with an estimated ratio we can use that ratio. If not we will default to a 35% expense ratio. For example, if you had 10,000-a-month average deposits over the last 12 months and your accountant cannot give an accurate expense ratio then your qualifying income would be $6,500 (35% expense ratio X 10,000 income).
From that number, we would use 55% of that for the total debt allowed to buy your home and pay the monthly debt that will show up on the credit report. If your account can provide a letter stating that your expense ratio is 25% then we would use $7,500 a month for income for the above example.
Investor Cash-Flow Analysis NON-QM Mortgage Requirements
Investor Cash Flow Analysis is the 3rd program. This is a very low-doc loan. It works like this.
- Must own your own home
- Must be buying or refinancing an investment property
- Must be self-employed for 2 years
- If buying an investment property, the buyer must put down at least 20%, usually, 25% or more is required
- Then no tax returns and no averaging bank deposits for income are required
- All you need for this program is to provide 2 months’ bank statements with the down payment
Also, need the following:
- Business License
- Driver license
- Insurance for the house
- Decent credit
- Mortgage Rates will be determined by Credit score, Down payment, and how much the investment property rents for
- If you have a positive cash flow rate will be better than if you have a negative cash flow
Cash flow is the rent minus the mortgage payment with taxes and insurance in the payment.
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Call us if this sounds like a loan for you
This BLOG On NON-QM Mortgage Requirements Is The Most Recent NON-QM Mortgage Requirement for our borrowers. Please contact Non-QM Mortgage Lenders for more information at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com to learn more about our NON-QM Mortgage Requirements on owner-occupant, second homes, and investment properties.
