In the mortgage world, there are loans that exist beyond the conventional ones, known as non-QM (Non-Qualified Mortgage) loans. But what exactly do these loans entail and who might be eligible to benefit from them? Read on to learn about three of the most common non-QM loans and how they can offer solutions for non-traditional borrowers.
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What Are Non-QM loans and Who Can Qualify?
Non-QM loans are those that don’t meet the strict guidelines set by government-sponsored agencies like Fannie Mae or Freddie Mac. These loans offer flexible and unique opportunities for those who may not fit inside the standard mortgage box. Non-QM mortgages cater to a variety of individuals who find it challenging to secure conventional financing. These include self-employed borrowers, business owners, investors and foreign nationals looking to invest in United States real estate. Next, we’ll uncover three of the most common non-QM loans.
Bank Statement Loans for Self-Employed Borrowers
Entrepreneurs and business owners who write off significant expenses on their tax returns may find it challenging to qualify for traditional mortgages. In this situation, a bank statement loan could be an option, as they do not require tax returns. The loan approval is based on a 12-month average of business-related deposits. With a down payment as low as 10% and no mortgage insurance necessary, bank statement loans provide an attractive alternative for those with fluctuating income streams but a healthy cash flow.
DSCR Loans for Investors
Investors seeking to finance rental properties can benefit from a non-QM loan called DSCR (Debt Service Coverage Ratio). DSCR loans, also known as investor cash flow loans, evaluate eligibility based on the fair market rent value equal to or greater than the total housing payment. With no income or job requirements and only 20% down, these loans are ideal for seasoned investors seeking efficiency and flexibility.
Foreign National Loans
For foreign nationals, non-QM loans offer a path to homeownership in the United States. With three credit reference letters from their home country, foreign nationals can secure financing with a minimum 25% down payment. Asset utilization is permitted as eligible documentation, making the process smoother for those with assets but a limited credit history.
Benefits of Non-QM Loans
The benefits of non-QM loans are clear: flexibility, accessibility, and tailored solutions for a diverse range of borrowers. It’s important to note that while non-QM loans open doors for unconventional borrowers, they may come with slightly higher interest rates or other terms compared to traditional mortgages. You can read more about loan programs to see what else you may qualify for. If you find yourself in a situation where a traditional mortgage is unattainable, don’t lose hope. Reach out to a mortgage professional who can review your special circumstances and help you find a tailored solution to turn your homeownership dreams into a reality. Whether you are self-employed, an investor, or a foreign national, there are options available to help you unlock the doors to your dream home.
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Why Choose FBC Mortgage?
FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are always available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.
Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.
All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2024.
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