Amarillo Non-Qualified Mortgage

If you find a home you love but your borrower profile doesn’t fit into the standard mortgage qualification guidelines, you might still be able to access the funding you need with a non-qualified mortgage program. 

These non-qualified mortgages can help borrowers with less-than-perfect credit, or income get the necessary financing.

At Capital Home Mortgage, we want to help you find the perfect mortgage for your unique circumstances, such as if you are self-employed, have a higher debt-to-income ratio, or have been through a recent bankruptcy or foreclosure.

What Is a Non-QM?

A non-qualified mortgage, also known as a non-QM loan or a non-conforming loan, is a mortgage that does not meet the standards of a qualified mortgage. A qualified mortgage follows specific rules set by the government, such as the Ability-to-Repay Rule, which states that lenders must make sure borrowers can afford the loan before approving them. Non-qualified mortgages, on the other hand, are not subject to these same rules.

Non-qualified mortgages may be more flexible regarding credit score requirements, down payment size, and other factors. However, this also means they may be more expensive, with higher interest rates and fees.

Qualification Requirements of Non-QM Loans

While non-qualified loans have flexible requirements, you should expect to provide documentation similar to what would be requested for a traditional loan. Since these types of loans can take applicants with uncommon situations and credit backgrounds, lenders may request more extensive information than they would otherwise need if applying through the bank or other typical lenders.

Here are a few essential qualification requirements you will need to meet to get approved for a non-QM loan.

     – Credit Score and Down Payment

FHA home loans typically require credit scores as low as 500, provided borrowers pay 10% as a down payment. On the other hand, for non-QM loans, you will need a higher FICO score, at least 620. While negotiating the down payment of the purchase price for up to 10 to 20% or even more is feasible, it still depends on extenuating circumstances.

     – Debt-to-Income Ratio

Most standard loans require borrowers to have a debt-to-income ratio between 36% to 43% to be eligible for a mortgage. In contrast, non-QM lenders sometimes allow a higher DTI of 50% or more. The DTI on non-QM varies, with some going up to 50% and others having a ceiling of 45% or less.

     – Income Documentation Requirements

Another critical factor in qualifying for a mortgage is proving your income. This can be more difficult for self-employed or earning a commission. Traditional lenders often require two years of tax returns and other documentation to verify your income. Some non-QM lenders require one year of tax returns or an alternate form of documentation.

Lenders will look at your employment history and stability when considering you for a loan. They want you to have a steady income and a good employment history. If you have had job changes or gaps in employment, you will need to explain them. Be prepared to provide documentation such as a leave of absence or medical leave.

Get a Non-QM Loan in Amarillo

If you are interested in getting a non-QM loan in Amarillo, Capital Home Mortgage can help. We specialize in non-qualified mortgages and have a team of experts who can help you through the process. We understand the traditional mortgage box doesn’t work for everyone, and we are here to help you get the financing you need.

Contact us at (806) 589-3428 to learn more about our non-qualified mortgage options.