Non-QM Mortgages
At Bennett Capital Partners, we understand that not all borrowers fit into the traditional mortgage lending box. That's why we specialize in providing flexible and innovative loan programs to borrowers who may not qualify for traditional mortgages. As a premier lending institution, we are committed to helping our clients achieve their dream of homeownership.
Our team of expert loan officers has years of experience in the non-QM mortgage industry and is licensed to originate non-QM mortgages throughout the state of Florida. We pride ourselves on our expertise, authoritativeness, and trustworthiness in the industry, making us a go-to choice for non-QM mortgages.
Whether you're a self-employed entrepreneur, have a unique income situation, or have credit challenges, we have a loan program that's right for you. Our cutting-edge technology and commitment to superior customer service ensure a smooth and stress-free application process.
Understanding Non-QM Mortgages
Non-QM Mortgage Programs
Bank Statement Loans
Bank statement loans are a type of non-QM loan that allow borrowers to use bank statements to verify their income instead of traditional forms of documentation such as pay stubs or W-2s. This type of loan is ideal for self-employed individuals or those with fluctuating income. Bank statement loans are a great option for self-employed borrowers and those with non-traditional forms of income.
Non-Warrantable Condos
A Non-warrantable condo is a condominium property that doesn't meet the criteria set by Fannie Mae and Freddie Mac for purchase or securitization. These criteria include restrictions on owner-occupancy ratios, rental restrictions, and other standards. Non-warrantable condos are not eligible for traditional mortgage financing through the government-sponsored enterprises.
Profit & Loss Only
Profit and Loss (P&L) only mortgage programs, also known as a "no tax return" mortgage program, is a type of mortgage lending that relies solely on a borrower's most recent profit and loss statement as the primary documentation for their income. This type of program is often utilized by self-employed individuals or business owners who have inconsistent or complex tax returns.
Super Jumbo
Super Jumbo Mortgages are a type of mortgage loan that exceeds the conforming loan limit of $726,200, which is the maximum loan amount that can be purchased or guaranteed by Fannie Mae and Freddie Mac. Super Jumbos go up to $30 million and are designed for high net worth individuals who are looking for large loans for luxury homes, second homes, or investment properties.
WVOE Only
WVOE only mortgage programs utilize an Employment Verification form (VOE) filled out by the employer, instead of the traditional W2 form, as part of the income documentation process. This type of program is often used by self-employed individuals, contract workers, and those in the gig economy who cannot provide traditional W-2 forms but still want to qualify for a mortgage. No Personal Tax Returns are required, the loan qualifies on thbe WVOE for income only.
Asset Depletion
Asset Depletion Mortgage Program, a borrower's assets, such as bank accounts, stocks, bonds, and other investments, can be used to determine their ability to repay the loan. The lender calculates the amount of income that could be generated from these assets, which can then be used either alone or in combination with traditional income verification to make a loan decision. No personal tax returns or W2's required.
Investment Property
Investment property loans offer alternative lending options for borrowers who don't fit the traditional QM criteria, such as those with a high debt-to-income ratio or unconventional income sources. A key advantage of non-QM investment property loans is the higher number of mortgages they allow compared to conventional loans. Additionally, these loans permit the use of corporate title or LLC vesting.
ITIN
ITIN (Individual Taxpayer Identification Number) Mortgages allow individuals who are foreign nationals or do not have a valid SSN to obtani a mortgage in the United States, regardless of their immigration status. These mortgages typically have relaxed income and credit requirements compared to traditional mortgage programs, making homeownership accessible for individuals who may not otherwise be able to obtain a mortgage.
Cross-Collaterlization
Cross collateralization mortgages are a type of mortgage loan that uses multiple properties as collateral for a single loan. Instead of using a single property as collateral for a loan, the lender uses two or more properties, which are cross-collateralized to secure the loan. This allows the borrower to obtain financing for multiple properties with a single loan.
Interest Only
Interest-Only Non-QM Mortgages are flexible financing options for borrowers who are seeking a mortgage that allows them to pay only the interest portion of their loan during a specified period of time. They are designed to provide borrowers with the ability to lower their monthly mortgage payments, and provides greater payment flexibility.
2nd Mortgages / HELOCS
Non-QM second mortgage and HELOC is a type of loan that allows alternative income verification using bank statements. These loans are in second lien position and provide borrowers with access to their equity without the need to refinance their first mortgage. This allows homeowners to use their built-up equity to finance various expenses, while still maintaining the first mortgage as their primary debt obligation.
No Income / No Employment
No Income No Employment loan, also known as a No Ratio loan, is a type of loan offered that does not require the borrower to provide proof of income or employment. This type of loan is typically intended for self-employed individuals or those with fluctuating income, as traditional underwriting methods may not accurately reflect their financial situation
1 Year Self Employed
1-year self-employed mortgage programs are an alternative to traditional mortgages, which typically require 2 years of business tax returns to verify income. In a 1-year self-employed mortgage program, the lender uses alternative methods to verify income, such as bank statements, profit and loss statements, or business licenses.
Cond-Tels
Condo-tel mortgage programs are a type of mortgage program designed specifically for purchasing or refinancing a condo-tel unit. Condo-tel units are unique properties that combine the features of a traditional condominium with the services and amenities of a hotel. These units are typically owned individually, but are managed and operated as part of a larger hotel or resort.
1099 Only
1099 only programs are a type of non-QM loan designed for self-employed borrowers who receive 1099's, rather than a W-2. This type of loan program is meant to provide a flexible mortgage option for individuals who do not have a traditional source of income, but can demonstrate their financial stability through their 1099 tax forms.
No Income Verified Assets
No Income Verified Asset Program uses assets instead of income to determine eligibility. Seasoned, liquid assets such as stocks or cash or retirement assets like a 401K or IRA can be used to calculate the borrower's income. This is done by subtracting any penalties and taxes from the asset account balance and ensuring that the resulting figure meets or exceeds the borrower's total debt obligation, including their mortgage and other liabilities.
Pledged Assets
Pledged asset loan programs are a type of mortgage financing that allows a borrower to use assets, such as stocks, bonds, or mutual funds, as collateral for the loan. In this program, the assets are held in a separate account and are used as security for the loan, rather than being sold or liquidated. The lender uses the value of the pledged assets to determine the loan amount and the borrower's ability to repay the loan.
Foreign Nationals
Non-QM foreign national loans are a type of mortgage loan specifically designed for foreign nationals who are not permanent residents of the country where they are applying for the loan. Non-QM foreign national loans may require alternative documentation, such as a passport or visa, and may consider factors such as the borrower's assets and credit history, rather than just their income and employment.
Short Terms Rental
Short-term rental mortgage program are a type of financing option specifically designed for individuals or entities who want to purchase or refinance a property used for short-term rental purposes, such as a vacation rental or an Airbnb rental. Factors such as the property's location, rental income, and the length of time the property will be rented can impact the eligibility and terms of the loan.
Recent Credit Event
Recent Credit Event Mortgages are a loan program designed for borrowers who have experienced a recent credit event such as a foreclosure, short sale, or bankruptcy. With this program, borrowers can obtain a mortgage with as little as 1 day out of a credit event. This type of mortgage offers an opportunity for individuals to re-establish their credit and become homeowners again.
Bridge-to-Sale
Bridge to Sale Mortgage is a mortgage for homeowners who are in the midst of selling their existing property and need temporary financing to purchase a new home. This loan offers short-term funding that bridges the gap between the sale of the current home and the purchase of the new one, thereby allowing the borrower to purchase their desired property without the burden of carrying two mortgages simultaneously
Understanding Non-QM Mortgages
What are non-QM loans?
A non-qualifying mortgage is a loan that doesn't meet the underwriting standards of the government-sponsored enterprises (GSEs) or the Consumer Financial Protection Bureau's (CFPB) Qualified Mortgage (QM) rules. Non-QM loans are offered by private lenders and may have higher interest rates and fees than conventional mortgages.
Non-QM loans may be designed for borrowers who don't fit the standard profile of a conventional mortgage borrower, such as self-employed individuals, foreign nationals, or borrowers with a high debt-to-income (DTI) ratio. Non-QM loans may also be used for investment properties, jumbo loans, or non-traditional property types.
How do Non-Qualifying Mortgages Work?
A non-qualifying mortgage is a loan that doesn't meet the underwriting standards of the government-sponsored enterprises (GSEs) or the Consumer Financial Protection Bureau's (CFPB) Qualified Mortgage (QM) rules. Non-QM loans are offered by private lenders and may have higher interest rates and fees than conventional mortgages.
Non-QM loans may be designed for borrowers who don't fit the standard profile of a conventional mortgage borrower, such as self-employed individuals, foreign nationals, or borrowers with a high debt-to-income (DTI) ratio. Non-QM loans may also be used for investment properties, jumbo loans, or non-traditional property types.
Who May Benefit from Non-Qualifying Mortgages?
Non-QM loans may be a good option for borrowers who don't meet the standard criteria for a conventional mortgage, but who have the ability to repay the loan. Non-QM loans may also be a good option for borrowers who need a loan for a non-traditional property type, such as a multi-unit property or a mixed-use property.
Non-QM loans may also be a good option for investors who want to purchase rental properties or to flip houses, as non-QM lenders may offer more flexible underwriting criteria and may consider the potential rental income or resale value of the property.
Why Choose Non-QM Loans?
There are several reasons why borrowers might choose non-QM loans over QM loans. One of the most common reasons is that they do not fit into the strict criteria set forth by the CFPB for QM loans. Borrowers who are self-employed, have fluctuating income, or have unique financial situations may not qualify for QM loans but may be able to secure financing through a non-QM loan. Additionally, borrowers who are looking to finance investment properties or high-end homes may find that non-QM loans offer more flexibility and options than QM loans.\
What are the underwriting guidelines for Non-QM mortgages?
Non-QM mortgages have more flexible underwriting guidelines compared to traditional Qualified Mortgages (QM). This allows for borrowers with unique financial circumstances or those who may not fit into the strict guidelines of a QM loan to still qualify for a mortgage. Non-QM lenders may consider factors such as cash reserves, income from non-traditional sources, and assets in addition to the traditional factors of credit score and debt-to-income ratio. These flexible guidelines can open up the possibility of homeownership to a wider range of borrowers, making Non-QM loans a great option for those who may have been denied a traditional mortgage in the past. Additionally, Non-QM mortgages may have less strict requirements on documentation, which can also make the loan application process more manageable for borrowers. Overall, the underwriting guidelines for Non-QM mortgages provide more opportunities for borrowers to qualify for a mortgage, even if they don't fit the mold of a traditional QM loan.
Some examples include:
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Alternative forms of income verification: Non-QM lenders often offer alternative methods of verifying a borrower's income, such as bank statements or liquid assets, which can make it easier for borrowers with nontraditional or fluctuating sources of income to qualify.
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Flexible underwriting guidelines: Non-QM loans often have more flexible underwriting guidelines than QM loans, which can make it easier for borrowers with unique financial circumstances to qualify.
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Lower credit score requirements: Non-QM lenders may have lower credit score requirements than traditional lenders, which can make it easier for borrowers with lower credit scores to qualify for a mortgage.
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Higher debt-to-income ratios: Non-QM loans may allow for higher debt-to-income ratios than QM loans, which can make it easier for borrowers with high levels of existing debt to qualify for a mortgage.
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More flexible documentation requirements: Non-QM lenders may have more flexible documentation requirements than traditional lenders, which can make it easier for borrowers to provide the necessary documentation to qualify for a mortgage.
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Jumbo loans: Many non-QM lenders offer jumbo loans that are higher than the conforming loan limits set by government-sponsored entities such as Fannie Mae and Freddie Mac.
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Nonprime loans: Non-QM loans are also known as nonprime loans, which are designed for borrowers who have a higher risk of default or financial instability.
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ITIN borrowers: Non-QM lenders also offer loan programs for borrowers who have Individual Tax Identification Number (ITIN)
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Bank-statement loans: Non-QM lenders also offer bank-statement loans, which are based on the borrower's income as reported on their bank statements, rather than traditional income documentation.
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Stated income, verified asset (SIVA) loans: Non-QM lenders also offer SIVA loans, which are based on the borrower's stated income and verified assets, rather than traditional income documentation.
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Borrowers with high debt-to-income ratios: Non-QM lenders also offer loans for borrowers with high debt-to-income ratios, who may have difficulty qualifying for a traditional mortgage.
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Real estate investors: Non-QM loans are also suitable for real estate investors, who may not have regular income or have a high debt-to-income ratio.
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Foreign nationals: Non-QM lenders may also offer loan programs for foreign nationals, who may not have a credit history or traditional income documentation in the United States.
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Self-employed borrowers: Non-QM loans are also suitable for self-employed borrowers, who may have difficulty providing traditional income documentation.
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Retirees: Non-QM loans are also suitable for retirees, who may have difficulty providing traditional income documentation.
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Business owners: Non-QM loans are also suitable for business owners, who may have difficulty providing traditional income documentation.
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Entrepreneurs: Non-QM loans are also suitable for entrepreneurs, who may have difficulty providing traditional income documentation.
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Gig-economy workers: Non-QM loans are also suitable for gig-economy workers, who may have difficulty providing traditional income documentation.
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Contract workers: Non-QM mortgages offer more flexible underwriting guidelines and alternative methods of verifying income, making them a good option for contract workers who may have inconsistent income or difficulty providing traditional documentation.
Who borrower types may benefit from a non-QM loan?
Non-QM loans provide an alternative option for borrowers who do not meet the qualifications for a qualified mortgage. These loans offer specialized products with varying underwriting guidelines, making them accessible to a wider range of borrowers.
Borrowers whose income sources may fluctuate or have limitations in documentation may find non-QM loans to be a suitable option. These loans often have more flexible underwriting criteria and may take into account alternative forms of income verification.
Such Borrowers Include:
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Entrepreneurs and self-employed individuals
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Independent contractors
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Small business owners
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Seasonal workers
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Retirees with pension or retirement income
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Investors with multiple properties
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High net worth individuals
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Borrowers with unique income streams
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Borrowers with non-traditional credit history
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Borrowers with high levels of existing debt
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Borrowers with a recent bankruptcy or foreclosure
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Borrowers with limited documentation
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Borrowers with a short credit history
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Borrowers with high income but low assets
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Borrowers with a history of late or missed payments.
Non-QM loans can be an ideal option for borrowers who may not meet the standards for a qualified mortgage. These loans often come with alternative methods of income verification, such as bank statements or liquid assets, and may offer more flexibility in terms of credit scores, making them a viable choice for those who may have nontraditional or fluctuating sources of income.
What are some common uses for a non-QM loan?
In addition to catering to borrowers with non-traditional or unstable income sources, non-QM lenders also offer a variety of other loan options to meet various needs, such as:
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Self-employed individuals or business owners who have difficulty providing traditional income documentation.
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Borrowers with a high debt-to-income ratio who may not qualify for a traditional loan.
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Investors looking to purchase multiple properties or rental properties.
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Borrowers with a recent credit event such as a bankruptcy or foreclosure.
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Borrowers with non-traditional income sources such as tips, commission, or bonuses.
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Borrowers looking to purchase or refinance a non-conforming property such as a jumbo loan or a loan for a farm or ranch.
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Borrowers seeking a loan for a short-term or adjustable-rate mortgage.
Borrowers looking for a loan with a lower down payment or no down payment. -
Borrowers with a low credit score or no credit history.
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Borrowers looking for a loan with a flexible prepayment option.
What are the debt-to-income ratio requirements for Non-QM mortgages?
Tthe specific debt-to-income ratio requirements for a non-QM loan, as they may vary depending on the lender or loan program. However, it is common for non-QM loans to have higher debt-to-income ratio limits than traditional QM loans, with some lenders allowing for ratios up to 55%. It is important to note that a higher debt-to-income ratio may make it more difficult to qualify for a loan and may also result in a higher interest rate. Working with a mortgage professional at Bennett Capital Partners can help you understand the specific requirements for a non-QM loan and determine if it is the best option for your financial situation.
What are the documentation requirements for Non-QM mortgages?
Non-QM mortgages have flexible documentation requirements, which means that borrowers may have more options to provide the necessary information to qualify for a loan. This can include bank statements, liquid assets, and other forms of income verification. This flexibility in documentation requirements can make it easier for borrowers who may not fit into traditional underwriting guidelines to qualify for a mortgage. Additionally, non-QM lenders may have less strict requirements for things like tax returns, pay stubs, and other traditional forms of documentation. This can save borrowers time and hassle in the loan application process. Overall, the documentation requirements for Non-QM mortgages are designed to be more flexible and accommodating to help more borrowers qualify for a home loan.
Some examples include:
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Bank statements
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Tax returns
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Asset statements
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Income verification letters
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Proof of income from contract work
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Paystubs or W-2 forms for self-employed individuals.
What are the credit score requirements for Non-QM mortgages?
The credit score requirements for Non-QM mortgages can vary depending on the lender. However, many Non-QM lenders may have lower credit score requirements than traditional lenders, which can make it easier for borrowers with lower credit scores to qualify for a mortgage. Additionally, Non-QM lenders may also take into account other factors such as the borrower's income and assets when assessing their creditworthiness. This means that even if a borrower has a lower credit score, they may still be able to qualify for a Non-QM mortgage if they have strong income and assets. Overall, Non-QM mortgages provide more flexibility and options for borrowers who may not meet the strict guidelines of a traditional mortgage.
Can Non-QM mortgages be insured, backed or guaranteed by government-sponsored enterprises?
No, non-QM mortgages cannot be insured, backed or guaranteed by government-sponsored enterprises such as Fannie Mae or Freddie Mac, or the Federal Housing Administration. However, this does not mean that non-QM loans are less safe or less secure for borrowers. Non-QM lenders often have more flexible underwriting guidelines and may offer alternative methods of verifying a borrower's income, making them an attractive option for those with unique financial circumstances who may not qualify for a traditional QM loan. Additionally, non-QM loans may have lower credit score requirements and allow for higher debt-to-income ratios than QM loans, making them more accessible to a wider range of borrowers.
How do Non-QM mortgages verify a borrower's income?
Non-QM mortgages have a more flexible approach to verifying a borrower's income compared to traditional loans. Instead of relying solely on traditional forms of income documentation such as pay stubs and W-2s, non-QM lenders may also consider alternative forms of income verification such as bank statements, liquid assets, and even self-employed income. This allows for a wider range of borrowers to qualify for a non-QM mortgage, including those who may have difficulty providing traditional forms of income documentation. Additionally, non-QM lenders may also consider factors such as the borrower's credit history and overall financial stability, allowing for a more holistic approach to income verification. Overall, the non-QM income verification process is designed to be more flexible and accommodating in order to accommodate the diverse financial circumstances of borrowers.
Why go through a mortgage broker for your Non-QM loan needs?
A mortgage broker may be the best choice for a non-QM mortgage for a few reasons. First, mortgage brokers have access to a wide range of loan products from different lenders, which can increase the chances of finding a non-QM mortgage that fits the borrower's specific needs. Second, mortgage brokers are experts in the mortgage industry and can guide borrowers through the loan process, including explaining the benefits and risks of non-QM mortgages. Third, mortgage brokers may be able to offer non-QM mortgages at more competitive rates than banks, as they have more options to choose from. Additionally, mortgage brokers can help borrowers to understand the underwriting guidelines and documentation requirements for non-QM mortgages, which can be more flexible than traditional mortgages. This allows borrowers to make an informed decision, and get the best non-QM mortgage options available in the market.
What Our Clients Say
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Philip was highly recommended to me and he did not disappoint. He was incredibly helpful and honest throughout the entire process, getting us the best program that matched our needs. We really didn't think we had a chance and luckily Philip …