What are Non-QM loans and who are they for?

"Non-QM stands for Non-Qualified Mortgage. It sounds technical, but the idea is simple: fully documented loans for creditworthy people whose finances don't slot neatly into the narrow rules used by Fannie Mae, Freddie Mac, FHA, or VA. They are not the risky products from the last housing crisis. Today's Non-QM loans are fully documented, fully underwritten mortgages that use different paperworkand common-sense analysisto show you can repay."

"Real life is messier. Self-employed? Business write-offs can make your net income look tiny on paper. Paid on 1099 or commission? Income can be uneven and hard for automated systems to read. Own rental property? Your personal debt-to-income ratio may look high even when the property cash flows. Retired or asset-rich? Plenty of savings, not much monthly income showing. Recent credit event? You're back on your feet, but the conventional waiting period isn't over."

"Qualified Mortgage (QM) is the industry's term for traditional financingloans that meet a legally defined checklist under federal rules. If a loan doesn't fit that checklist, it's labeled Non-QM. That's a legal label, not a judgment about risk or documentation. Non-QM lenders still: verify income and assets, order appraisals, set sensible loan-to-value (LTV) and reserve requirements, and document your ability to repay."

Non-QM loans are Non-Qualified Mortgages that offer fully documented, fully underwritten financing for creditworthy borrowers who do not meet conventional QM checklist rules. Lenders verify income and assets, order appraisals, set loan-to-value and reserve requirements, and document ability to repay using alternative paperwork. Common borrower scenarios include self-employed individuals with tax write-offs, 1099 or commission earners with uneven income, rental property owners with property cash flow, retirees with assets but low monthly income, recent credit-event recoveries, and foreign nationals or ITIN holders. Bank-statement loans aggregate 12–24 months of deposits to calculate qualifying income instead of tax returns.

Read at www.housingwire.com