Non-Qualified Mortgage In Florida

What is a Non-Qualified Mortgage?

A non-qualified mortgage (non-QM) is a home loan that does not comply with the Consumer Financial Protection Bureau’s (CFPB) lending criteria and does not meet the requirements of a qualified mortgage. Non-QM loans are intended for borrowers who cannot meet the stringent requirements for a qualified mortgage, such as a specified debt-to-income (DTI) ratio or a minimum credit score. Non-qualified mortgages are frequently utilized by borrowers with low credit scores, high DTI ratios, or irregular income, such as freelancers or self-employed individuals, who may require more creative income verification methods.

What is the Difference Between Qualified and Non-Qualified Mortgages?

The primary distinction between qualified and non-qualified mortgages is their adherence to consumer protections established by the Dodd-Frank Act and the Consumer Financial Protection Bureau. These safeguards are followed by qualified mortgages, which regulate interest rates and fees on home loans and require lenders to verify the borrower’s ability to repay the loan. Non-qualified mortgages, on the other hand, do not adhere to these rules and are not insured, guaranteed, or backed by government organizations such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), Fannie Mae, or Freddie Mac. Non-QM loans may include a wide range of mortgages, including those with terms longer than 30 years and those with negative amortization.

What are the Advantages of a Non-Qualified Mortgage?

The advantages of a non-qualified mortgage (non-QM) include:

• Access for borrowers with low credit scores:

Non-Qualified mortgage loans provide an opportunity for homebuyers with low credit scores to purchase a home.

• Less stringent income documentation:

Non-QM loans have more flexible documentation requirements, making it easier for self-employed individuals, business owners, or gig-economy workers to qualify for a mortgage without providing traditional income documentation like paycheck stubs, W-2s, or tax returns. 

• Suitability for real estate investors:

Non-QM loans are an excellent option for investors with more than ten financed investment properties, which is the limit set by most traditional lenders. Non-QM lenders may also offer debt-service coverage ratio loans, which qualify borrowers based on rental revenue from the new property rather than other sources of income.

• Availability of interest-only loans:

Non-QM lenders can offer interest-only loans, which are not allowed for qualified mortgages. These loans can be a popular choice for investors.

• Easier mortgage approval:

Due to a more flexible financial verification process, obtaining a non-qualified mortgage loan might be easier for certain types of borrowers.

It is important to note that while non-QM loans may benefit borrowers who do not qualify for traditional mortgages, they may also come with higher interest rates and fees due to the greater risk that lenders take on when offering these loans.

Apply for a Non-Qualified Mortgage in Florida

It’s essential to recognize that non-QMs are different from subprime mortgages if you’re worried about whether they’re safe. Our Home Loan Specialists can answer your questions about Non-Qualified Mortgage if it is your best option.

Apply for a non-QM mortgage in Florida with Capital Home Mortgage today. Call (239) 310-5599 to obtain a no-obligation consultation.