Self-employed, an investor buying in an LLC, a buyer from overseas, retired with savings, a credit event a while back, or an ITIN instead of a Social Security number. If a bank looked at your file and got nervous, a non-QM loan might be the answer. Looking for a non-QM lender in DFW, from Fort Worth out to Parker County? This is the stuff I like working on.
Federal law has an ability-to-repay rule. Before making a home loan, a lender has to make a reasonable, good-faith determination that you can pay it back, looking at things like your income or assets, your debts, your monthly payment, and your credit history. And they have to verify what they rely on. No more stated income.
A qualified mortgage, or QM, is a loan that meets a stricter set of standards on top of that. For example, a general QM can't have interest-only payments, negative amortization, a balloon payment, or a term longer than the federal maximum, and its points and fees are capped. Most conventional, FHA, and VA loans are QMs.
A non-QM loan is one that doesn't fit the QM definition, usually because income is documented differently or the loan has a feature like interest-only. It still has to meet the ability-to-repay rule. One wrinkle: loans on rental property you won't live in are generally treated as business-purpose credit under federal rules, which is part of why DSCR loans work the way they do.
The four I get asked about most each have their own guide. Short version here, the details on each page.
For self-employed borrowers, business owners, and 1099 workers whose tax returns undersell what they make. Qualify on 12 or 24 months of personal or business bank statements, 1099s, a P&L, or a written verification of employment. Loans up to $3.5 million.
Business-purpose loans for rental property that qualify on the rent, not your personal income. DSCR 1.0 and up, down to 0.75 for professional investors, below 1.0 for properties still stabilizing, plus a no-ratio option. Close in an LLC, short-term rentals eligible, interest-only options.
For retirees and high-net-worth borrowers. Your savings and investments are turned into a qualifying income figure, so you don't need a paycheck. Primary home, purchase or rate-and-term refinance.
Above the conforming limit and outside standard jumbo underwriting. Bank statement, asset-based, and other alt-doc options for bigger loans, plus super jumbo for primary homes in big metros like DFW.
Not sure where a big loan crosses the line? The conforming loan limits are set by FHFA every year.
Expanded prime is the near-conventional end of non-QM: strong credit and real income, with a little more flexibility than Fannie Mae or Freddie Mac allow. Think one year of tax returns instead of two, a recent job or business change, a bigger loan, or a property type a conventional loan won't take. Alt-doc is the broader idea: document income with something other than tax returns, like bank statements, a P&L, 1099s, a written verification of employment, or your assets.
Borrowers who are close to conventional but trip over one rule. Strong credit and reserves, with one thing that doesn't fit the box.
Full documentation with one or two years of returns, or one of the alt-doc options. Single-family, PUDs, 2-4 units, and condos, including non-warrantable ones and condotels. On investment property, borrowing in an LLC is available on some programs, not just DSCR.
Pricing is usually somewhat higher than conventional. Fixed and adjustable options are available, and interest-only options are available on some programs. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
A condo is "warrantable" when the whole project meets Fannie Mae and Freddie Mac's rules. Plenty of good buildings don't, for reasons that have nothing to do with your unit. Fannie Mae's project rules rule out things like too much commercial space, too many units owned by investors or one owner, and certain kinds of HOA income. Non-QM programs can finance condos in those projects. Some can also finance condotels, condo units in a building that runs like a hotel, with a front desk and a rental program. Agency loans generally won't touch those.
Buyers of condos in mixed-use buildings with shops or offices on the ground floor, newer projects with a high share of investor owners, buildings where the HOA earns income from amenities like commercial parking, and condotel units.
Your normal income documentation, plus the condo questionnaire, HOA budget, and project details. Limits on commercial space and investor concentration still apply, they're just looser than conventional.
Pricing is usually higher than a conventional condo loan, and the project review can take time. Order the HOA documents early. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
Log homes, geodesic domes, and other one-of-a-kind houses are hard for a regular loan because appraisers have trouble finding similar sales to compare. Some programs review unique properties case by case.
Buyers of unusual homes in good shape, especially out in the country west of Fort Worth, where a few of these are hiding.
Your income documents, plus an appraisal that can support the value with other unique homes nearby. The home generally needs to be in at least average condition and the kind of property that sells in a reasonable time. Very large homes, with lots of bedrooms, get an extra look.
Case-by-case review means more time and more questions. Not every unique property will fit, and the appraisal is the biggest variable. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
For an initial period, your payment covers only interest, not principal. After that, the payment goes up to pay the loan down over the remaining term. By federal definition, a loan with interest-only payments can't be a general qualified mortgage, which is why it lives here. If you only need the first year or two cheaper, a temporary buydown might be the simpler tool.
Borrowers with strong income or assets who want lower payments early and have a real plan for the principal. Not people trying to squeeze into a bigger house.
Depends on the program it's paired with. Interest-only can be full documentation, bank statement, or DSCR.
You don't build equity from payments during the interest-only period, the payment rises later, and pricing is usually higher than a standard loan. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
Conventional loans have set waiting periods after a bankruptcy, foreclosure, or short sale. Some non-QM programs offer shorter ones, sometimes in as little as two years after a bankruptcy, foreclosure, short sale, or deed-in-lieu, depending on the file. They can cover purchases, rate-and-term and cash-out refinances, primary homes, second homes, and investment property, 1-4 units, condos including condotels, and LLC borrowing for investment property, with income from full documentation, bank statements, 1099s, or assets. More in my guide to buying after bankruptcy or foreclosure, including the typical FHA, VA, and conventional waiting periods.
People with a real credit event in the past who have rebuilt and don't want to wait out the full conventional clock.
The discharge or completion paperwork, dates, and your credit since then. A short explanation of what happened helps.
Pricing is usually higher, down payments are often larger, and the shorter the time since the event, the stricter it tends to be. The best terms generally open up after several years. Exact waiting periods depend on the program. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
Mortgages for borrowers who file taxes with an Individual Taxpayer Identification Number from the IRS instead of a Social Security number.
People who pay U.S. taxes with an ITIN, work here, and want to buy a home.
Your ITIN letter, tax returns or other income documentation, bank statements, and a valid ID. Requirements for credit history vary.
Pricing is usually higher than conventional, and down payments are often larger. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
I do foreign national loans. They're for buyers who live outside the U.S. and don't have U.S. credit or U.S. income, buying a second home or an investment property here. Investors can also use select DSCR programs.
International buyers purchasing in DFW or elsewhere in the US.
Passport and visa, proof of foreign income and assets, and sometimes international credit references. Plan ahead for moving the down payment into the U.S., because timing matters.
Pricing is usually higher, down payments are usually larger, and paperwork takes longer, especially when documents need translating. Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
Doctor, dentist, pharmacist, vet, CRNA, or nurse practitioner? My physician loan program may be a better fit than non-QM. See doctor loans.
Send the short form, call, or email. Tell me what you do for a living, how you get paid, what you're buying, and roughly the price. Bank statement loan, DSCR loan, or something odder, I'll tell you which program fits and what I need.
Phone: 817-873-6288
Email: [email protected]
A non-QM loan is a mortgage that doesn't meet the federal definition of a qualified mortgage, usually because income is documented a different way, like bank statements, or because of a feature like interest-only payments. The lender still has to make a good-faith determination that you can repay it.
No. Stated income home loans are gone. Non-QM loans still document income or assets, just differently than a W-2 loan does.
Not always. If your tax returns show enough income, a conventional self-employed mortgage is usually the better deal. If they don't, a bank statement, P&L, or 1099 loan might work. Send me two years of returns and I'll tell you which way to go.
A DSCR loan is a business-purpose investment property loan that qualifies mainly on the property's rent instead of your personal income. DSCR stands for debt service coverage ratio. DSCR loans can close in an LLC.
A non-warrantable condo is a unit in a project that doesn't meet Fannie Mae and Freddie Mac's rules, often because of commercial space, a high share of investor owners, or HOA income from amenities. Non-QM programs can finance them.
Possibly. Some programs review unique properties case by case. The appraisal has to support the value, and the home needs to be in good condition.
Yes. If you live outside the U.S. and don't have U.S. credit or U.S. income, a foreign national loan is how you buy a second home or an investment property here. Start early, because moving the down payment into the U.S. takes time.
Usually, yes. Pricing is typically higher than conventional, and down payments are often bigger. That's the trade for flexibility. If you can qualify conventionally, do that.
Credit score, down payment, and reserve requirements depend on the program and the file. Tell me the deal.
Possibly. Some non-QM programs work after a bankruptcy, foreclosure, short sale, or deed-in-lieu, sometimes in as little as two years, depending on the file. Pricing is usually higher than conventional, FHA, or VA.
For investment property, often yes. DSCR loans can close in an LLC, and some other non-QM programs allow LLC borrowing on investment property too. A home you live in stays in your own name. Tell me how you want to take title up front.
Often people try to, once their tax returns catch up. Some non-QM loans have prepayment penalties, especially DSCR loans, so ask about that up front.
Subject to qualification and program guidelines. Not all applicants will qualify. Not a commitment to lend.