A Non-Qualified Mortgage Loan
is any home loan that doesn’t comply with the
Consumer Financial Protection Bureau’s (CFPB) existing rules on Qualified Mortgage.
Non-Qualified Mortgages (Non-QM) are designed for good borrowers with good credit and unique financial circumstances; self-employed borrowers that cannot show their income documentation, tax returns, schedules, 1040, etc. or have less than 2 years of self-employment history. Also, for those that have a greater than 43% Debt-to-Income ratio (DTI).
0 x 30 late payments in the last 12 months on housing history
1 x 30 late payments in the last 12 months in non-housing history
Letter of explanation for any credit issues (one-time issues such as bankruptcies or foreclosures)
Low LTVs, typically less than 80%, but sometimes even lower
Adequate assets to serve as reserves for 6 to 12 months