Non-QM Loans Go Mainstream – Info from Prestige Capital

Non-QM Loans Go Mainstream – Info from Prestige Capital

Non-QM (non-qualified) loans were a niche product until fairly recently. Non-QM mortgages offer flexible options for people that don’t meet the strict requirements to qualify for a conventional mortgage. Let’s take a look at who can benefit from this increasingly popular type of loan program.

Self-Employed and Freelance Buyers
Self-employed and freelance workers often use tax write-offs to lower their reported net income and reduce the amount of tax they must pay. The down side is, when applying for a conventional mortgage, the lender looks at that reduced income as a baseline for how much you can borrow.

Conversely, a Non-QM loan allows for alternative documentation, where you may be able to provide 12-24 months of bank statements instead of the standard W-2s and tax returns. This can make the difference between closing the deal on a home or not qualifying at all!

High-Net-Worth Buyers
Retirees and high-net-worth buyers can also use alternative documentation to qualify for a non-QM mortgage without liquidating their investments. The lender may look at the accumulated assets of savings, retirement funds, or investments, rather than a steady paycheck. This allows the borrower to keep their investments intact and earning money, instead of cashing out to close the deal.

Commission-Based and Seasonal Workers
The underwriter can look at a borrower’s total earnings over a year to calculate an average monthly income, rather than penalizing gaps or fluctuation in income.

These are just a few scenarios where a Non-QM loan makes sense for the borrower. If you – or your friends and family – have any questions about mortgage planning, we’re here to walk you through all your options. We’re just a phone call away and I look forward to talking with your soon!