What is a Non QM Loan? Well, let’s break it down. “Non” stands for Nonqualified. The “QM” stands for Qualified Mortgage. The standard is the Fannie Mae and Freddie Mac loans that have the protection of the Ability to Repay rules.
Let’s break it down this way. If you cannot present tax returns and W2’s to the bank, then you fall out of the conventional qualified mortgage. This sounds unfair possibly to the self employed business owner. Self employed business owners work hard, many times keep their FICO score above 700 and have money in reserves yet cannot be approved for a loan.
Within the last 3 years or so, a few investment groups have looked into this niche market and found if you have a quality underwriting guideline, you can mitigate loan default.
So hello to the new Non-QM loans! Loans like 12 Month bank statement loans and 24 month bank statements loans are the hot loan for the self employed borrower. There are many hurdles to jump however even if you backend ration is 43%. Learn more about these types of bank statement loans and how to qualify.