Business owners and W2 commission professionals often have difficulty obtaining mortgage credit. Non-QM mortgage lending makes a big difference.
Non-Qualified Mortgages (Non-QM) are designed for self-employed borrowers. Agency lender (Fannie Mae, Freddie Mac, FHA, VA,) guidelines prevent self-employed people from purchasing real estate or refinancing their homes. Non-Qualified mortgages benefit by providing alternative documentation loan programs to the underserved and often self-employed borrower. Underwriting guidelines for these types of loans are based on the borrower's "Ability to Repay" (ATR). Non-QM mortgage lending is about alternative documentation in the areas of income documentation and Employment Verification documentation.
Self-Employed Borrowers and Non-QM Mortgages
Non-Qualified Mortgages (Non-QM) is about helping self-employed people purchase or refinance a home by providing alternative documentation loan programs to the underserved and often self-employed borrower. Underwriting guidelines for these types of loans are based on the borrower's "Ability to Repay" (ATR). Self-employed borrowers often have unique financial situations and/or credit profiles which in-turn can mean a complex or complicated tax return, 1040's, schedules, so forth. Therefore, it is critical we have these programs to make possible the opportunity of homeownership for the self-employed.
Non-QM Mortgage Lending
Non-QM mortgage lending is about alternative documentation in the areas of income documentation and Employment Verification documentation. These mortgage programs, in large part, are for self-employed borrowers, defined as >25% ownership in a business as well as commission/W-2 "wage earners". However, some of these loan programs also benefit borrowers that have a >43% Debt-to-Income (DTI) ratio. Additionally, for any borrower that has 2 years (12-month employment verification) employment history (not the traditional 2-year requirement), some just require what's called a Verbal Verification of Employment (VOE).
Non-Prime Mortgage Lenders and Loans
Also, reduced credit scores, reduced seasoning on major "credit events" such as bankruptcy, foreclosure, short sale, and loan modification, these Non-Qualified programs are also called Non-Prime, a sub-category Non-QM product.
Also available is the interest-only payment feature (monthly payment option to pay only the interest due for that particular month) Real estate investors that have up to 20 financed properties in their real estate investment portfolio are included.
These alternative income documentation programs including asset-based and asset depletion as a stand-alone income source or in conjunction with bank statements (cash-flow), business or personal to illustrate a borrower's Ability-to-Repay (ATR). Most of these non-qualified (Non-QM) alt-doc mortgage lenders will also accept "borrower prepared" and "unaudited" P&L statements. Flexibility is key to one's success. All of these loan programs are manually underwritten individually.