Non QM Program Loans
Many borrowers are capable of repaying a mortgage but for various reasons do not meet the "qualified" borrower model which is included in the Dodd-Frank Bill. Some of the reasons may include:
Debt to income - borrowers who have high amounts of revolving debt may still be able to pay a mortgage, but their income and debt ratios are too high.
FICO score issues -in some instances, a borrower may have suffered a short-term financial problem which created a series of late payments on their credit report. Even after the issue has been resolved, these late payments remain on your credit report
Issues with self-employment - a borrower who has been self-employed for less than two years, or a self-employed person who maximizes deductions making their income look lower may also have issues qualifying for a mortgage under the new guidelines.
Keep in mind, none of these issues makes these loans riskier than a qualified mortgage since lenders will still take the necessary steps to ensure the borrower puts down a substantial down payment (usually 20 percent or more) and has enough income to support the loan.
What types of Non-QM Loans are there?
In order to assist a borrower in qualifying for a mortgage loan, lenders offering non-QM loans offer various programs. Some of these may include a loan with a longer amortization, interest only loans, higher debt ratios, or be more flexible about income verification.