Non-QM Down Payment Guidelines On Home Purchase

This ARTICLE On Non-QM Down Payment Guidelines On Home Purchase Was PUBLISHED On May 21st, 2020

Non-QM Down Payment Guidelines
Gustan Cho Associates

Non-QM Down Payment Guidelines On Home Purchase For Homebuyers On Non-QM Mortgages:

  • If you are in the market for a mortgage, minimum down payment requirements are probably on your mind
  • In this blog, we will detail down payment requirements on the mortgage products we offer
  • Saving for the down payment can be the hardest part of obtaining a mortgage
  • Over the past few decades, Americans are saving less and less, making it harder to invest in long-term assets such as a home
  • This blog will focus on down payment requirements, and dive into down payment requirements for our NON-QM mortgage loans

In this article, we will discuss and cover Non-QM Down Payment Guidelines On Home Purchase on Non-QM mortgages.

Non-QM Down Payment Guidelines Versus Traditional Government And Conventional Loans

In 2019, it was estimated that almost 70% of Americans have $1,000 in their savings account.

  • This information was broken down further where 45% of respondents said they had ZERO dollars in their savings account
  • This is not a good trend for saving to buy a house
  • The down payment hurdle is often the hardest obstacle in the home buying journey

Most homebuyers can easily afford the proposed new housing payment on a home purchase. However, coming up with the down payment is a big barrier for most Americans.

Tips For Saving Money On A Home Purchase

Tips for saving money to buy a house:

  • Experts believe motivation can help Americans save
  • You need to find something that motivates you such as buying your dream home
  • Telling yourself you need to save and actually saving are two different things
  • Once you have the motivation, you need to make saving a true priority
  • Something that cannot wait until next month
  • You must start saving today
  • It will help if you create a monthly budget and keep yourself accountable
  • Stop spending so much money on going out and on material items and start thinking long term
  • You will be shocked at how many nonessential expenses pile up when you are not tracking
  • In the year 2019, Americans wasted about $350 dollars a year on streaming services alone
  • Services such as Netflix, Hulu, Spotify, or YouTube TV can be a gigantic waste of money
  • Especially when you are not using them
  • In a recent poll, 1000 participants stated they pay for streaming services they have not used in months

There is a reason Netflix stock has increased from under $60 in 2015 to over $385 in 2020! Cutting down clutter spending will help you save for more important tangible items, such as a home.

Non-QM Down Payment Guidelines On The Minimum Down Payment For Homebuyers

What are the guidelines for a down payment other than QM regarding a minimum down payment for home buyers?

Automate your savings:

  • Many Americans throw money away on streaming services because they are out of sight and out of mind, and automatically billed every month
  • Many times, you do not even realize it
  • This is the exact strategy you should choose when creating a plan to save money
  • Clients in the past have opened two separate bank accounts, one for everyday expenses and one for savings
  • At two separate banks
  • They set up their direct deposit to automatically send funds to the savings bank every time you are paid
  • This is also out of sight and out of mind

When you do not do this account as usable money, it will compound over time and create savings without the stress.

Non-QM Down Payment Guidelines On Loan Programs

How much do you need to buy a home? (Primary residence)

  • As the data shows, Americans are having tough time-saving money
  • This opens opportunities for low down payment mortgage options
  • Below are the general down payment requirements for your standard mortgage products

FHA – 3.5% with credit scores over 580:

10% with a credit score of 500 – 579

Conventional Loans:

  • 3% down as a first-time homebuyer
  • 5% as a repeat homebuyer

VA  Mortgages:

  • NO down payment required
  • VA offers 100% financing with no down payment required by homebuyers

USDA Loans:

  • NO down payment required
  • USDA loans offer 100% financing with no down payment required by homebuyers

The mortgage products referenced above are standard QM MORTGAGE (qualifying mortgage) products. What if you cannot qualify for your everyday mortgage financing?

Non-QM Down Payment Guidelines On Home Purchase On Non-QM Versus Conforming And Government Loans

That is when a NON-QM mortgage option may be the best for you.

  • A NON-QM mortgage loan is used in situations where derogatory credit is involved
  • These NON-QM mortgage products are available to borrowers even one day out of a foreclosure, short sale, deed-in-lieu, or bankruptcy
  • These mortgage products even allow you to be late on your mortgage or rent

That is why Gustan Cho Associates have a full slate of NON-QM mortgage loans.

Non-QM Guidelines And Requirements

What are the non-QM guidelines and requirements

NON-QM mortgage loans offer less strict requirements when it comes to derogatory events such as a foreclosure, short sale, deed-in-lieu, mortgage late payments, and bankruptcies.

  • These loan programs are a great alternative to renting and making a landlord rich!
  • A NON-QM loan product can offer alternative income requirements such as a one-year tax return calculation, bank statement income, and even asset depletion use for qualification purposes

These loans help thousands of self-employed individuals achieve homeownership every single year.

Non-QM Down Payment Requirements Is Based On Risk Level And Credit Scores

NON-QM down payment requirements based on Credit Score:

  • 720 score or higher – 5% (loan amounts up to $1,500,000)
  • 660 score or higher – 10% (loan amounts up to $2,000,000)
  • 600 score or higher – 15% (loan amounts up to $2,000,000)
  • 500 score or higher – 25% (loan amounts up to $999,999)

As you can see, the credit score requirements allow scores all the way down to 500 (even lower on a case by case basis). NON-QM

Other Non-QM Mortgage Guidelines

What are some other general requirements for NON-QM mortgage loans?

Gift funds:

  • Gift funds are generally not allowed for a NON-QM mortgage product
  • However, the seasoning requirement is lower compared to a qualifying mortgage
  • Most NON-QM loan products only require a 30-day asset verification
  • So, if you receive gift funds more than one bank statement ago, the underwriter may not question it
  • Since NON-QM mortgage products do allow case-by-case exceptions
  • There are instances where gift funds may be used

Either way, you will need a portion of the down payment to come from your own funds.

Reserves Requirements On Non-QM Mortgages

Why are the requirements for non-QM mortgages reserved?

Many NON-QM loan products do you have a reserve requirement.

  • Generally, that is a minimum of three to six months of mortgage payment in your bank after closing costs
  • Reserves are created to insure you are prepared for a catastrophic event such as losing your job
  • This cushion will allow you to make your mortgage payment for a few months even without an income source

It is always good to stay within your budget and be prepared for unexpected costs associated with homeownership.

Starting The Non-QM Mortgage Qualification Process

After reading this blog, you will realize we are the NON-QM mortgage leading experts. We offer a full slate of different NON-QM mortgage loans. NON-QM mortgage loans are a great alternative for borrowers who may have been turned down by their lender or bank. For general questions surrounding NON-QM mortgage loans, please call or text Mike Gracz on 630-659-7644, you may also send an email to mgracz@gustancho.com. We are available seven days a week for any mortgage-related questions. We look forward to hearing from you.

Leave A Reply

Your email address will not be published.

Call Now ButtonCALL NOW