FLORIDA NON-QM LOANS
Non-QM loans, or non-qualified mortgages, offer purchase and refinancing options to homeowners who might not meet the standard criteria for lending due to factors like income, employment, or credit history.
What is a Non-QM Loan?
A Non-QM loan falls outside the strict regulations established by the Consumer Financial Protection Bureau (CFPB). Often, this type of loan suits borrowers with higher debt-to-income ratios, interest-only loan programs, and fluctuating incomes. Offering more lenient underwriting criteria, Non-QM loans open up a broader range of financing options for homeowners.
What is the Difference Between a Qualified vs. Non-Qualified Mortgage?
A Qualified Mortgage (QM) follows the standards outlined by the Consumer Financial Protection Bureau (CFPB), in contrast to a Non-QM loan, which does not. Key distinctions between Qualified and Non-Qualified mortgages are:
- CFPB (Consumer Financial Protection Bureau) Guidelines Compliance:
- QM Loans: Comply with the CFPB’s Ability-to-Repay (ATR) rules.
- Non-QM Loans: Do not meet all the ATR criteria, providing flexibility for unconventional borrowers.
- Debt-to-Income (DTI) Ratios:
- QM Loans: Typically require a DTI ratio of 43% or lower.
- Non-QM Loans: May allow for higher DTI ratios.
- Income Verification:
- QM Loans: Demand standard income verification documents, such as W-2s, tax returns, and pay stubs.
- Non-QM Loans: Offer flexibility by accepting alternative documentation for income verification.
- Loan Features:
- QM Loans: Prohibit risky features such as negative amortization, interest-only payments, and terms exceeding 30 years.
- Non-QM Loans: May include these features, offering a broader range of loan options.
- Down Payment and Credit History:
- QM Loans: Often require a minimum down payment and a good credit history.
- Non-QM Loans: Provide more flexibility with credit history requirements and down payment amounts.
- Mortgage Insurance:
- QM Loans: Usually required if the down payment is less than 20%.
- Non-QM Loans: The requirements for mortgage insurance can vary, and it might not always be necessary.
- Interest Rates and Fees:
- QM Loans: Are subject to caps on points and fees charged to the borrower.
- Non-QM Loans: May carry higher interest rates and fees due to the increased risk taken by lenders.
Who Can Benefit From a Non-Qm Loan?
Our Non-QM Loan Programs?
Florida Home Loans by Atlantic Mortgage & Finance Corporation provides a diverse array of Non-QM purchase and mortgage refinance options designed to assist borrowers from various backgrounds in reaching their mortgage financing objectives. Among our offerings for Non-QM purchase and refinancing, you’ll find::
- Bank Statement Loans: Targeted at self-employed individuals or business owners, allowing them to use 12 to 24 months of bank statements for income verification instead of traditional tax documents.
- Asset-Based Loans: Suitable for those with substantial assets but irregular income, where lenders consider the borrower’s assets as evidence of the ability to repay the loan.
- Interest-Only Loans: Offers lower initial monthly payments by allowing borrowers to pay only the interest on the loan for a set period.
- DSCR (Debt Service Coverage Ratio) Loans: Designed for real estate investors, focusing on the property’s cash flow or rental income potential rather than the borrower’s personal income.
- Foreign National Loans: Aimed at non-U.S. citizens purchasing property in the United States, using alternative criteria for assessing creditworthiness.
- Jumbo Loans with Non-QM Features: Larger loan amounts that exceed conforming loan limits, with Non-QM flexibility for borrowers outside traditional lending criteria.
- Non-Prime/Alt-A Loans: For borrowers with lower credit scores or recent significant credit events, offering a pathway to homeownership with lenient credit requirements.
- Recent Credit Event Loans: Targeted at those who have undergone significant credit events but have since recovered, allowing for homeownership sooner than traditional loans would.
- No-Doc/Limited Doc Loans: Require minimal documentation for income and assets, catering to a specific borrower profile with less common availability post-financial crisis.
Non-QM loans can come with higher interest rates and fees due to the increased risk to lenders. It’s crucial for borrowers to evaluate their financial situation thoroughly and possibly consult a mortgage professional to identify the most suitable Non-QM loan program for their needs. Additionally, comparing offerings from different lenders is advisable to ensure the best terms.
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