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  • HOUSTON FiNTECH
  • LOAN PROGRAMS
    • GET A QUOTE
    • RESIDENTIAL REAL ESTATE
    • COMMERCIAL REAL ESTATE
    • BUSINESS LOANS
  • (832) 930-8484
  • More
    • HOUSTON FiNTECH
    • LOAN PROGRAMS
      • GET A QUOTE
      • RESIDENTIAL REAL ESTATE
      • COMMERCIAL REAL ESTATE
      • BUSINESS LOANS
    • (832) 930-8484
  • HOUSTON FiNTECH
  • LOAN PROGRAMS
    • GET A QUOTE
    • RESIDENTIAL REAL ESTATE
    • COMMERCIAL REAL ESTATE
    • BUSINESS LOANS
  • (832) 930-8484
How Do Non-QM Loans Work?
REAL ESTATE LOAN PROGRAM

Non-QM Loans

Non-QM (Non-Qualified Mortgage) lending refers to mortgage loans that do not meet the Qualified Mortgage (QM) guidelines set by the Consumer Financial Protection Bureau (CFPB). These loans are designed for borrowers who may not qualify for traditional (QM) loans due to unconventional income sources, credit history, etc

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Key Features of Non-QM Loans

Key Features of Non-QM Loans


  1. Flexible Income Documentation
    • Borrowers can qualify without traditional income verification (W-2s, tax returns).
    • Commonly use bank statements, rental income, asset depletion, or DSCR (Debt Service Coverage Ratio) instead.

  1. Higher Debt-to-Income (DTI) Ratios
    • Traditional QM loans cap DTI at 43-50%.
    • Non-QM loans allow DTI above 50% in some cases.

  1. Alternative Credit History
    • Borrowers with low credit scores, prior bankruptcies, or self-employment can qualify.
    • Lenders may consider payment history, assets, and rental income instead of credit score alone.

  1. Higher Interest Rates
    • Higher risk = higher rates (typically 1-3% above conventional loans).
    • Rates vary depending on creditworthiness, income verification type, and down payment.

  1. Larger Loan Amounts (Jumbo Loans)
    • QM loans follow Fannie Mae & Freddie Mac loan limits (e.g., $766,550 for 2024 in most areas).
    • Non-QM loans can exceed these limits, making them ideal for luxury or high-value properties.

  1. Longer or Interest-Only Loan Terms
    • Some lenders offer 40-year terms or interest-only payments to lower monthly costs.


Who Uses Non-QM Loans?


✅ Self-Employed Borrowers

  • Business owners, freelancers, and independent contractors.
  • Use bank statements, 1099 forms, or profit/loss statements instead of W-2s.

✅ Real Estate Investors

  • Use DSCR loans where rental income qualifies instead of personal income.
  • No DTI requirements, making it easier to finance multiple properties.

✅ Foreign Nationals

  • No U.S. credit history required.
  • Often qualify using bank statements, foreign income, or assets.

✅ High Net Worth Individuals

  • Can use asset depletion loans (loan based on liquid assets instead of income).

✅ Borrowers with Credit Challenges

  • Recent bankruptcies, foreclosures, or late payments may still qualify.


Pros & Cons of Non-QM Loans


✅ Pros
✔️ Easier approval for self-employed, investors, and credit-challenged borrowers.
✔️ Alternative income verification (bank statements, DSCR, asset depletion).
✔️ Higher loan limits than conventional loans.
✔️ No limit on financed properties for real estate investors.

❌ Cons
❌ Higher interest rates (typically 1-3% above conventional loans).
❌ Larger down payments required (15-30%+).
❌ Fewer lenders offer Non-QM loans, limiting options.


Who Should Consider a Non-QM Loan?


🔹 Self-employed professionals who can’t verify income traditionally.
🔹 Real estate investors needing DSCR loans or financing for multiple properties.
🔹 Foreign nationals without U.S. credit history.
🔹 Luxury home buyers needing jumbo loan options.
🔹 Borrowers with past credit issues (bankruptcies, late payments, high DTI).

HOUSTON FINTECH Non-QM Loans

Non-QM Loans

START UP WORKING CAPITAL LOANS UP TO $500k
START UP WORKING CAPITAL LOANS UP TO $500k

Start Up Funding

LOANS UP TO $500k

  • 680+ FICO Score
  • 5 - 7 Year Term
  • No minimum length of time in business
  • Fixed monthly payments
  • Funding in 7-15 business days

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We’ll work with you to provide proper structuring that ensure your loan meets every requirement.


HOUSTON FiNTECH

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