2021 Updated Non-QM Mortgages and Alternative Financing Programs
What is a non-QM (non Qualified Mortgage) loan and how can it help you?
- Non-QM loans are products designed to help with specific home financing problems.
- Bank statement mortgages, asset depletion products, and non-prime loans are all non-QM.
- Non-QM loans can be very helpful for those with hard-to-verify income or credit issues.
Because non-QM home loans are not standardized, rates and guidelines can vary widely. That can make shopping for these loans a challenge.
What Is a Non-QM Home Loan?
The term “non-QM” simply means that a loan is not a qualified mortgage (QM). Qualified mortgages are loan products that the federal government Non-QM Loans are alternative mortgage loan programs. Non-QM loans are loan programs that benefit borrowers who either cannot qualify for traditional mortgage loan programs. Non-QM loans are not just loans for bad credit borrowers. Many non-QM borrowers have high credit scores and high net worth. However, many borrowers may not benefit from traditional government and/or conventional mortgages due to one of many reasons. It can be due to the maximum loan limit. Or it may be due to not having a steady income or no income but having a high net worth. High net worth individuals with a lot of assets may qualify for our non-QM asset-depletion loan program but not qualify for a traditional mortgage. In this article, we will discuss and cover non-QM mortgages and alternative financing loan programs.
Benefits Of Non-QM Loans Versus Traditional Mortgage Loan Programs
2021 Updated Non-QM Mortgages And Alternative Financing Programs are in full force. Non-QM loans have become increasingly popular prior to the coronavirus outbreak in February 2020. However, once the pandemic hit the United States, all non-QM wholesale mortgage lenders suspended their operations. This included borrowers who got conditional loan approvals as well as clear to close. In March 2020, all non-QM loans were suspended from origination, processing, underwriting, and closing until further notice. Liquidity issues on the secondary mortgage markets were a major concern. However, there are a handful of non-QM wholesale lenders that re-opened operations. Not all non-QM wholesale lenders have the same lending requirements. Lending requirements for non-QM loans are different. Gustan Cho Associates has wholesale lending partnerships with almost every single non-QM wholesale lender. If there is a non-QM and/or alternative financing mortgage program in the marketplace, GCA Mortgage Group has it.
2021 Updated Non-QM Mortgages And Alternative Financing Programs Look Promising
After the coronavirus outbreak hit the nation, many non-QM lenders went out of business within weeks of the pandemic. Others permanently closed their doors. Non-QM loans were the hottest mortgage loan program prior to the COVID-19 pandemic. Non-QM mortgages are not hard money loans. They are portfolio loans with competitive mortgage rates. Non-QM loans are a great alternative mortgage loan program for borrowers who cannot qualify for government and conventional loans. Non-QM and other alternative mortgage programs are portfolio loans and have no set uniform guidelines like government and conventional loans. Borrowers who are shopping for non-QM loans will need to ask for the lender’s eligibility requirements depending on the mortgage program.
2021 Updated Non-QM Mortgages: Bank Statement Mortgages For Self-Employed Borrowers
12 and 24-month bank statement mortgages are for self-employed borrowers and/or business owners. Federal income tax returns are not required. Non-QM wholesale mortgage lenders will average the past 12 months of bank statement deposits. The average monthly deposit over the past 12 months is the income used for the borrower. Withdrawals do not matter. There are two different types of bank statement mortgages. The 12-month and 24-month bank statement mortgage loan program. The 12-month bank statement mortgage program requires a 20% down payment or 80% loan-to-value. For borrowers who want to put less than a 20% down payment or higher than an 80% loan-to-value, then they may want to consider the 24-month bank statement mortgage program. Gustan Cho Associates offers rate and term non-QM refinance at 90% loan-to-value with a 720 credit score. Homeowners can do an 80% loan-to-value cash-out refinance with a 740 credit score with non-QM loans. There is no maximum loan limit on non-QM loans. There is no private mortgage insurance required on non-QM loans.
Investor Series Non-QM Mortgages: Debt Service Coverage
Gustan Cho Associates is affiliated with dozens of non-QM wholesale lending partnerships. GCA Mortgage Group has a national reputation for being a one-stop mortgage shop for having not just government and conventional loans with no lender overlays but having dozens of non-QM loan programs. If there is a non-QM mortgage program in today’s marketplace, Gustan Cho Associates probably already has it:
- No limit on the number of financed properties
- However, our non-QM wholesale investor will only finance $5 million in aggregate dollar amount
- Any aggregate loan size higher than the $5 million aggregate dollar amount will be evaluated on a case-by-case scenario
- Investor products do not require landlord/rental history
- Vested as LLC or Corporation is acceptable.
- Rate and Term Refinance up to 80% LTV with 720 credit scores
- Cash-out refinance up to 75% LTV with 720 credit score
- Must meet 115% of rental income to PITIA in qualifying
Non-QM and alternative mortgage loan programs are for owner-occupant, second homes, and investment property financing.
Full Doc Non-QM Mortgages Up To $4 Million Loan Amounts
Full Doc Non-QM Mortgages:
- 1 year of income documentation for full doc programs
- Rate and Term Refinance up to 90% LTV with 720 scores
- Cash-out refinance up to 80% LTV with 700 credit score
Near Prime Jumbo Mortgages:
- Rate and Term 740 credit score up to 90% LTV up to $1.5 million dollar loan amount
- 700 credit score up to 90% loan-to-value up to $1 million dollar loan amount
- 40% DTI at 90% LTV
- 43% debt to income ratio up to 85% loan-to-value or less
- 80% LTV or less 6 mths reserves
- 80-85% loan-to-value require 9 months reserves
- 86-90% loan-to-value require 12 months of reserves
- For every additional finance property, 6 months of reserves for each other financed property
2021 Updated Non-QM Mortgages: Asset-Depletion Loans
Asset Depletion Loan Program:
- 90 days seasoned, 100% of the value, divided by 60 months for monthly income
- Rate and Term Refinance at 80% LTV with a 680 credit score
- Cash-out refinance up to 75% LTV with a 720 credit score
- Must have 110% in assets of the loan amount plus reserve requirements
- Gifts are not allowed on this mortgage loan program
Fannie Mae only – C1 conventional Agency:
- Minimum 620 credit score
- Must have approved findings
- No manual underwriting
- 95% maximum loan-to-value
Cash-out transaction cashback can be used toward 3 of the 6 months of reserves requirement, except E1:
- 10-year Interest-Only period available (40-year total term)
- NO credit event in the last 24 months
- If the borrower had a credit event in the past 24-48 months, then the maximum loan-to-value is lowered to 65% LTV, and the reserve requirements are increased by 6 months
- Non-Warrantable Condos up to 85%
- Condotels up to 70% LTV
- 100% gift allowed on primary home mortgage loans
- Gift allowed on investment property financing with the borrower putting down 5% of own funds
- 6 months of reserves on up to a maximum of $2 million loan amount
- Over $2 million loan amounts require 12 months of reserves
- 1X30 on mortgage from last 6 to 12 months
- 0X30 for most previous 6 months
- Up to 50% DTI, except E1 max 40-43% and C1 whatever approved eligible findings per automated underwriting system (AUS) allow
- Transferred appraisals accepted
The minimum loan amount is $100k min loan amount. The maximum loan amount is $4,000,000. Loan amounts greater than $4 million dollars can be done in a case-by-case scenario.
Non-QM Mortgages One Day Out Of Foreclosure And Bankruptcy
Prior to the coronavirus outbreak hit the nation back in February 2020, most non-QM wholesale lenders did not have any waiting period requirements after bankruptcy and/or a housing event. However, after non-QM wholesale lenders reopened their operations, many non-QM wholesale lenders have implemented new waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. However, Gustan Cho Associates has non-QM wholesale lenders that do not have any waiting period requirements after bankruptcy and/or a housing event. The 2021 housing market is expected to be stronger than in 2020 with no correction in sight. Non-QM loans are great alternative financing solutions for owner-occupant, second homes, and investment property mortgage loans.