Non-QM Loans

What are Non-QM Loans?

Non-QM (Non-Qualified Mortgage) loans are a type of mortgage designed for borrowers who may not meet the strict criteria of traditional (qualified) loans. These loans offer flexibility in terms of income verification, credit history, and other requirements. Non-QM loans are ideal for self-employed individuals, real estate investors, or those with non-traditional income sources who may not be able to qualify for conventional mortgages but can still afford a home. Unlike traditional loans, Non-QM loans are not backed by government-sponsored enterprises like Fannie Mae or Freddie Mac.

Are Non-QM Loans Right for You?

Non-QM loans are ideal for individuals who have unique financial situations or non-traditional income sources, such as:

Self-employed individuals who may not be able to provide traditional income verification like pay stubs or W-2s.
Real estate investors looking for loans based on rental income or property cash flow.
Borrowers with complex financial profiles, such as those with multiple properties or significant assets but irregular income.
Individuals with lower credit scores or credit events (such as a bankruptcy or foreclosure) that disqualify them from traditional loans.

If you fall into one of these categories and don’t qualify for a conventional loan, a Non-QM loan might be a great option for you.

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Eligibility Requirements

To qualify for a Non-QM loan, you typically need to meet the following criteria:

Minimum Credit Score

A credit score of 500-620 (depending on the loan program and lender). Higher scores may lead to better rates.

Down Payment

A down payment of at least 10% is often required, though larger down payments (20-30%) can lead to better terms.

Debt-to-Income Ratio

A DTI ratio of up to 50% is generally allowed, though compensating factors such as high income or assets may allow for higher ratios.

Income Verification

Non-QM loans use alternative income verification methods, such as bank statements, profit and loss statements, rental income, or asset-based qualifications.

Property Type

Non-QM loans can be used for primary residences, second homes, or investment properties.

Non-QM Loans

Numbers at a Glance

Here’s a quick overview of key numbers associated with this type of loans

Minimum Credit Score

500-620

Varies by lender

Down Payment

10% to 30%

Varies by loan type

Maximum DTI Ratio

43% to 50%

Varies by lender

Loan Term

15, 20, or 30

Years to payoff the loan

Upfront Mortgage Insurance Premium (UFMIP)

None

Depending on lender requirements

Annual Mortgage Insurance Premium (MIP)

None

PMI may apply for certain programs with lower down payments

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We offer a variety of loan programs designed to meet the needs of every homebuyer.

Non-QM Loan is perfect for you?

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Benefits of Non-QM Loans

Flexible Income Verification

Non-QM loans offer alternative ways to verify income, including bank statements, rental income, or asset-based qualification, making them perfect for self-employed borrowers.

Higher Loan Limits

Borrowers can access higher loan amounts compared to conventional limits, making Non-QM loans ideal for high-value properties or real estate investors.

Credit Flexibility

Non-QM loans are more lenient with credit scores and histories, allowing those with past credit issues, such as a bankruptcy or foreclosure, to still qualify.

No Standardized Rules

Since Non-QM loans are customized to the borrower, lenders can tailor terms to meet individual needs, providing more options for unique financial situations.

Not the Loan You're Looking for?

Check out other loan options

Ideal for borrowers with good credit, conventional loans offer competitive interest rates and flexible terms.

Available to veterans and active-duty service members, VA loans provide excellent terms with no down payment required.

Backed by the Federal Housing Administration, FHA loans are perfect for first-time homebuyers or those with less-than-perfect credit.

Designed for higher-priced homes, jumbo loans offer financing options above conventional loan limits.

ARMs start with a lower fixed interest rate for an initial period, then adjust periodically based on market conditions.

These government-backed loans are tailored for rural and suburban homebuyers, often with zero down payment.

Pay only the interest on your mortgage for a set period, ideal for buyers who expect an increase in income or future refinancing.

Enjoy the security of a consistent interest rate and stable monthly payments for the life of your loan.

Allows homeowners 62+ to access home equity without monthly payments, repaid when the home is sold or vacated.

Combines purchase and renovation costs into one loan, perfect for buyers looking to fix up a property.

You can always ask for advice from a mortgage loan expert.

Ready to start an application for a loan?

Non-QM Loans FAQ's

What is the difference between a Non-QM loan and a traditional loan?

Non-QM loans are more flexible in terms of income verification, credit requirements, and borrower qualifications, while traditional loans follow strict guidelines set by Fannie Mae and Freddie Mac.

Can I get a Non-QM loan with bad credit?

Yes, Non-QM loans often accept borrowers with lower credit scores or past credit events like bankruptcy or foreclosure, though you may need a higher down payment.

Do Non-QM loans have higher interest rates?

Non-QM loans typically have higher interest rates than traditional loans because they involve more risk for lenders, but the terms are often tailored to the borrower’s unique financial situation.

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First Finance Lending will guide you with expert advice and personalized service to start your homeownership journey with the perfect loan program.