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What Is a Non-QM Loan?
A non-qualified mortgage loan is more commonly referred to as a Non-QM loan. Within the mortgage industry, a qualified home loan is one that complies with the requirements set forth by the Consumer Financial Protection Bureau (CFPB) and standards set by the federal government. These include loans sold or insured by entities such as Fannie Mae or Freddie Mac. Not every borrower fits neatly inside a traditional government matrix. Investors, foreign nationals and those who are self-employed, as well as borrowers with credit blemishes, such as foreclosures, low credit scores or prior bankruptcies, may find it difficult to qualify for a conventional loan. A Non-QM Loan may offer an ideal solution for borrowers like these who find it difficult to qualify for a conventional loan.
Benefits of Non-QM Loan
Loan Requirements & Process
While there are no uniform underwriting standards for non-QM loans, lenders tend to specialize in certain types of non-QM products. Interrest rates and loan terms may vary widely from lender to lender. Data compiled by Corelogic in 2019 found the following common credit characteristics of closed non-QM loans: