Non-QM Loans are frequently refered to as No Income Loans. Jake Taylor Home Loans is a local No Income Loan in Gilbert, Az.
Homebuyers who do not have the traditional and steady forms of income that are generally sought after by mortgage lenders, may still have sufficient income or assets to be able to afford homeownership. Even though they may not meet the qualifications for conventional loans due to various reasons, a non-qualified mortgage (non-QM) can be a suitable option in these scenarios.
No Income loans refer to mortgages that do not comply with the guidelines established by the Consumer Financial Protection Bureau (CFPB) to be considered as qualified mortgages. These loans do not pass the CFPB's "ability to repay" rule, which demands that lenders assess the borrower's finances and set terms that the borrower is likely to be able to repay. These borrowers have irregular tax returns, irregular monthly earnings, etc, and typically are self employed borrowers.
No Income loans can be beneficial for individuals who have found the home of their dreams but were rejected for a home loan under qualified-mortgage standards. A no income loan or non-qualified mortgage can be a temporary lending solution until the borrower meets the conventional mortgage guidelines and can refinance to a traditional loan
BORROWERS WHO ARE SELF-EMPLOYED While standard loan programs require tax documents to prove your self-employed income, non-QM on no income lenders may offer bank statement mortgages with no need for filed tax paperwork. The lender evaluates deposits based on 12 to 24 months’ worth of personal or business statements to determine the qualifying income of a no income loan.
BORROWERS WITH HIGH NET WORTH Some lenders allow you to divide the total cash balance in an asset account by a lender-chosen time period and use the result for qualifying income. This is known as an asset depletion loan. For example, a $200,000 savings balance may be converted into $833.33 of extra monthly qualifying income with a typical 20-year asset depletion loan term.
BORROWERS INVESTING IN MULTIPLE RENTAL UNITS Non-QM or no income loans may be a good choice for investors who own more than 10 financed investment properties — the limit for most conventional lenders. Other non-QM lenders offer debt-service coverage ratio loans for real estate investors. If the rent on the new home covers the monthly payment, you don’t need other income to qualify.
BORROWERS WITH RECENT BAD CREDIT You may be eligible for a non-QM loan or a no income loan one day after completing a bankruptcy or foreclosure. You typically need to wait two to seven years after a significant credit event for standard loan programs.
BORROWERS WHO ARE FOREIGN NATIONALS A foreign national is a citizen of another country who lives in the U.S. for brief periods for work or vacation. Non-QM loans or no income loans for foreign nationals may not require proof of U.S. income, credit or a Social Security number.
BORROWERS WHO WANT AN INTEREST-ONLY PAYMENT OPTION Sporadic income-earners may benefit from an interest-only loan that allows for a lower payment option during times of the year when they earn less. One caveat: Your payment could increase after the interest-only period ends, making the loan harder to repay.
Non-QM loans or no income offer a number of advantages, including:
The documents needed for a Non-QM loan application can differ significantly depending on the applicant's financial situation. To verify income, you can supply either personal and business tax returns, bank statements or investment account statements. In certain situations, income verification is not required. The credit scores and debt-to-income ratios will also be considered. Non-QM loans or no income loans adopt a more comprehensive approach to evaluate the applicant's financial status rather than strictly adhering to a standard underwriting matrix.
Non-QM loans or no income loans do not have a uniform set of underwriting standards and each lender tends to focus on specific types of non-QM products. As a result, interest rates and loan terms may vary greatly among lenders. According to data compiled by CoreLogic in the first quarter of 2022, the following were the common credit characteristics of closed non-QM loans:
Additionally, CoreLogic's analysis also found that the top three reasons borrowers chose non-QM loans were: