Do you want to become a homeowner, but are worried that you may be unable to qualify for a mortgage because you have a nontraditional income or have a credit rating that is less than ideal. If either of these circumstances apply to your situation, you may be interested in applying for a non-QM loan, which allows you to qualify for a mortgage based on alternative criteria. If you are located in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to better understand your home financing options, Foundation Mortgage can help. Read on to learn more about purchasing a home using a non-QM loan.
What Is a Non-QM Loan?
Non-QM loans help borrowers who have certain unique financial circumstances acquire a mortgage. These particular loan types do not meet the specific requirements to be classified as a “qualified mortgage”. In a typical qualified mortgage, lenders evaluate a borrower’s employment status, income, and credit score, and a mortgage cannot be considered qualified if risky payment characteristics are evident. Non-QM mortgages follow different eligibility guidelines than a conventional loan, and are not solely based on standard loan requirements like credit score. Non-QM loans use other indicators to get an understanding of a borrower’s complete financial situation who may have had credit issues in the past or who may have irregular forms of income. Even though there are no specific requirements for obtaining a non-QM loan, they will usually require a 20% down payment, a credit score of 760 or higher, and a higher-than-average debt-to-income ratio, (DTI).
What Are the Advantages of a Non-QM Loan?
A non-QM mortgage could be a beneficial option for many types of borrowers. First of all, they make it simpler for people who are self-employed or who have an untraditional form of income to qualify for a mortgage by allowing them to provide alternative forms of documentation. Also, there are many adjustable and fixed rate options available with a non-QM loan, and they have less strict credit requirements, which can help make it possible for borrowers who have had previous financial problems such as a bankruptcy or who have lower credit scores to be able to qualify for a loan. The types of borrowers that typically benefit from a non-QM mortgage are people that are self-employed, both prime and non-prime borrowers, real estate investors, and foreign nationals.
Get Help Obtaining a Non-QM Mortgage
If you are interested in purchasing a home, and have unique financial circumstances that may not allow you to qualify for a typical mortgage in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for a consultation. We can work closely with you to determine the best financing solution for your situation.
