If you are interested in buying a property but have concerns that you might not be able to qualify for home financing due to having an untraditional source of income or a lower credit score, you may want to consider a non-QM mortgage. Non-QM loans help potential buyers that have less common financial circumstances qualify for financing by using alternative eligibility criteria. If you are interested in buying a property that is located in or around the areas of Carmel Valley, Carlsbad, or Encinitas, California, Mitchell Bonilla with C2 Financial can help you better understand your financing options. Continue reading to learn more about how to purchase a property with a non-QM mortgage.
What Is A Non-QM Mortgage?
A non-QM mortgage does not meet the specific requirements that are usually required to be classified as a traditional, qualified mortgage, and is intended to help borrowers that might not have typical financial situations acquire a home loan. A non-QM mortgage follows a different set of guidelines than a conventional loan to determine a borrower’s eligibility, and lending isn’t completely based on standard loan requirements, whereas with traditional loans, a lender will evaluate a borrower’s credit history, income, employment status, etc. to determine if a borrower is able to afford a mortgage. Instead, with non-QM mortgages, lenders consider other indicators in order to get a clearer picture of a borrower’s financial circumstances, and work well for homebuyers who have had past credit issues or have unique sources of income. Non-QM loans generally do not have set eligibility requirements, but typically do require a down payment of 20 percent, a credit score of at least 760, and a debt-to-income, (DTI), ratio of 37 percent.
Advantages Of A Non-QM Mortgage
A non-QM mortgage can offer several benefits for a potential homebuyer, including:
- They make it easier for self-employed workers or people with a non-traditional source of income to qualify for a mortgage by allowing them to provide alternative types of documentation to verify eligibility.
- They offer a variety of fixed rate and adjustable rate options to help make home ownership a possibility.
- Non-QM mortgages have less restrictive credit requirements, which makes it more manageable for borrowers who have experienced past financial issues, such as a bankruptcy or a foreclosure, to buy a home.
- Many different types of borrowers may be able to benefit from a non-QM loan, including real estate investors, self-employed workers, both prime and non-prime borrowers, and foreign nationals.
Making Home Ownership A Reality With A Non-QM Mortgage
If you have been hesitant to apply for a mortgage due to your unique financial circumstances, and want to know more about your home financing options, contact Mitchell Bonilla with C2 Financial today for a consultation.