NON-QM Home Loan Guidelines For Borrowers With Bad Credit

NON-QM Home Loan Guidelines For Borrowers With Bad Credit

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About NON-QM Home Loan Guidelines For Borrowers With Bad Credit

NON-QM Home Loan Guidelines And How It Benefits Borrowers Who Do Not Qualify For Traditional Mortgages:

We have all heard the stories of the last-second mortgage denial nightmare. In today’s highly regulated mortgage industry this seems to be a common trend. With the ever-changing guidelines, many loan officers are not up to date with their knowledge of guidelines. This can cause problems throughout the entire process. Resulting in you losing earnest money, money for inspections, and money for the appraisal. At the end of the day, you do not get your dream home and you’re out quite a bit of money. Gustan Cho Associates have received many phone calls about last-second mortgage denials due to job gaps, declining income, late payments not being seasoned. While the loan officer is to blame, sometimes credit issues pop up during the mortgage process. This may be a hard stop for most lenders. Gustan Cho Associates have a whole line of NON-QM Mortgage Products that have saved the day on many occasions.

What Are NON-QM Loans And NON-QM Home Loan Guidelines

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A NON-QM loan program that does not follow FHA, VA, Fannie Mae, Freddie Mac, or USDA mortgage guidelines. Please check out QM MORTGAGE by the CFPB for more details on Qualified Mortgages. Meaning these loan programs are a bit more lenient. While they have their own set of guidelines, the lender has the ability to make exceptions on a case by case. Making each approval unique.

Types Of Borrowers Who Benefits From NON-QM Home Loans

We can share countless success stories about NON-QM Mortgages. One of the most common uses for NON-QM mortgages saving the day has to do with the Foreclosure waiting periods for QM Mortgages. Many borrowers do not understand the concept of foreclosure waiting periods. This can be incredibly frustrating when a borrower realizes their foreclosure waiting period does not start the day that leaves the house, but it starts the day the county decides to record the transfer on the deed. There is no telling when the county will get around to recording the deed. Every county is different. When you get into some larger Counties such as Los Angeles, California, or even Cook County, Illinois the process can take over a year at times. This can increase your foreclosure waiting period by over 12 months. Meaning your two-year waiting period for a VA loan, the three-year waiting period for an FHA loan, or seven-year waiting period for a conventional loan may not start for months after you vacate the property. The good news is NON-QM mortgages do not have a seasoning requirement for mortgage foreclosures.


NON-QM Home Loan Guidelines On Student Loans

Deferred student loans and Income-Based Repayment plans (IBR) can ruin your home buying power. Many loan programs such as FHA loans do not allow an income-based repayment plan to be used. Even if your student loans are deferred you still need to include a monthly payment of 1% of the balance due against your monthly debt to income ratio. While conventional loans do allow the use of income-based repayment plans they must factor in deferred student loan payments. VA loans do allow you to omit a deferred student loan if the loan is deferred for 12 or more months (from the closing date). VA loans and income-based repayment plans are rarely used for DTI purposes. This is when NON-QM loans can help many borrowers. If your student loans are in deferment for 12 or more months, THEY WILL BE EXCLUDED FROM YOUR DTI RATIO!

That’s right, this has saved many deals. when a loan officer who does is not up to date on STUDENT LOAN GUIDELINES your pre-qualification may not be accurate, leading to a last-second denial.

NON-QM Home Loan Guidelines On Self Employed Borrowers

Self Employed borrowers use NON-QM loans all the time. The main reason is tax returns and debt-to-income ratio guidelines. The majority of self-employed Americans use tax write-offs when filing their Federal IncomeTax Returns. While these write-offs are legal they can stand in your way from obtaining a mortgage. If you have to write-offs on your tax returns and are looking for a mortgage you should read our blog on BANK STATEMENT LOANS. This is a great loan product to start building equity in a property as you file your taxes stronger for two years.

Starting The Mortgage Process On Non-QM Loans

What are the steps to starting a NON-QM Loan application? That is very simple. The process is the same as a regular loan application. You will send in the following information:

  • Last 60 Days Bank Statements – to source down payment
  • Last 30 Days Pay Stubs
  •  Last Two Years W-2’S
  • Last Two Years Tax Returns
  • Driver’s License
  • Copy of social security card

If using a bank statement loan:

  • Last 60 Days Bank Statements – to source down payment and calculate income
  • Driver’s License
  • Social Security Card

Then call me on (800) 900-8569 and I will send you an application link!

For more information on NON-QM loans please reach out to Mike Gracz on (800) 900-8569 or email me at I am an expert in NON-QM Lending and can answer any questions you may have!

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