Non-QM
Loans (Non-QM)

• Non-Prime Mortgage Loans

  : Non-prime mortgages are similar to subprime loans but may be less risky. These loans offer alternative options for borrowers who do not meet the traditional lending criteria.

• Subprime Mortgage Loans

  : These are home loans offered to borrowers with poor credit scores, typically below 620. Subprime mortgages often have higher interest rates and fees as a risk mitigation for lenders.

• Credit-Challenged Mortgages

  – These are loans for borrowers with lower credit scores or credit histories with blemishes such as late payments or bankruptcies.

• Alt-A Mortgages

  Alt-A Mortgages (Alternative A-Paper Mortgages) – These loans fall between prime and subprime mortgages and are often offered to borrowers with good credit but little documentation.

• No Documentation Mortgages

  No Documentation Mortgages – Also known as “no doc” loans, these mortgages do not require extensive documentation of the borrower’s income or assets.

• Foreign National Mortgages

  – These loans are for individuals who are not US citizens or residents but want to buy property in the US.

• Non-Permanent Resident Alien Mortgages

  Non-Permanent Resident Alien Mortgages – These loans are for individuals who do not have US citizenship or permanent residency status.

• ITIN loans

  , or Individual Taxpayer Identification Number loans, are a type of non-qualified mortgage (non-QM) designed for individuals who do not have a Social Security number but still need a mortgage loan. These loans are typically available to non-citizens, including those with ITINs and resident aliens, and do not require a credit score or traditional forms of income verification. They often have higher interest rates and stricter eligibility requirements compared to traditional mortgages, but provide an option for non-traditional borrowers to finance their home purchase.

• Fixed Rates Mortgages

  This type of loan offers predictable monthly payments, making it easier for borrowers to budget and plan.

• Adjustable-Rate Mortgages (ARM)

  Adjustable-Rate Mortgages (ARM) – This type of mortgage offers an initial fixed interest rate period, followed by a variable interest rate that changes based on market conditions.

• Option Adjustable-Rate Mortgage (ARM) Loans

  : These mortgages give borrowers the option to choose between making a fixed or adjustable payment each month. The adjustable payment will fluctuate based on market interest rates, while the fixed payment remains the same

• Hybrid Mortgage Loans

  : Hybrid mortgages combine features of both fixed and adjustable-rate mortgages. They start with a fixed interest rate for a specific period and then convert to an adjustable-rate for the remainder of the loan term.

• Interest-Only Mortgage Loans

  : With an interest-only mortgage, borrowers are only required to pay the interest portion of the loan for a specific period, usually between 5-10 years, before principal payments kick in. These loans can be advantageous for those expecting larger income in the future.

• Balloon Mortgage Loans

  : Balloon loans have a fixed interest rate and payment for a specific number of years, usually 5-7 years. After the initial period, the remaining balance becomes due as a lump sum, which can be refinanced or paid off.

• Asset-Based Loans

  : Asset-based loans are secured by the borrower’s assets, such as their investments or cash reserves. These loans can be used by borrowers who have a high net worth but do not have regular income

• NINA (No Income No Asset) Mortgage Loans

  : NINA loans are specifically for self-employed borrowers who cannot provide proof of income or assets. These loans usually have higher interest rates and require a larger down payment.

• Stated Income Loans

  : These loans are ideal for self-employed individuals or those with non-traditional income sources who may not have sufficient documentation to support their income claims.

• Bank Statement Loans

  Bank statement loans are a type of non-qualified mortgage (non-QM) loan designed for self-employed individuals and small business owners who may not have traditional W-2 income documentation to support their mortgage application. These loans utilize bank statements, rather than tax returns or pay stubs, to verify the borrower’s income and expenses. With bank statement loans, borrowers can use their personal or business bank statements to demonstrate their ability to repay the loan. This is especially beneficial for those who have fluctuating income or use non-traditional methods to receive income, such as freelance work or rental properties. The lender will typically review the borrower’s bank statements over a period of 12-24 months to assess their average monthly income and expenses.

Non-warrantable properties refer to properties that do not meet the lending standards set by Fannie Mae or Freddie Mac, the two largest buyers of mortgages in the United States. These properties are often considered risky for conventional loans and therefore fall into the category of non-qualified mortgage (non-QM) for the mortgage industry. Non-warrantable properties can include but are not limited to: condominiums or cooperatives that do not meet certain financial or owner-occupancy requirements, properties with multiple units, commercial properties, and properties with unique features or characteristics that make them difficult to sell. Lenders generally have stricter guidelines for non-warrantable properties and may require a higher down payment or interest rate to mitigate the risk associated with these types of properties. Non-QM lenders specialize in providing financing for these types of properties, providing alternative mortgage options for borrowers who may not qualify for traditional loans.