Everything You Need to Know About Non-QM

The Different Types of Non-QM Loan Products

There are many different types of Non-QM loans out there, so it’s important to know what you can expect from each one before signing on the dotted line.


Introduction

When you're buying a home, it's important to know that you can get the funding that you need. There are many different types of loans available to homeowners, but one of the most popular is a non-conforming mortgage loan. Non-QM mortgages became more popular due to their lower interest rates and higher affordability. Today, there are still plenty of reasons why non-QM loans can be beneficial for homeownership.
 

What are Non-QM home loans?

Non-QM home loans are not underwritten by Fannie Mae or Freddie Mac, so they're also known as private mortgages, jumbo loans, or non-conforming loans. They can be used for investment properties and second homes as well as primary residences.
 

Fix & Flip home loans

Fix and Flip loans are short term and not intended to be a long-term solution for your mortgage needs. If you’re planning on fixing up your home and selling it, then this is the type of loan for you.

A fix, flip, or flip-to-rent property is one that’s bought with the intention of putting some work into it, selling it for a higher price than what was paid for it at purchase, and using that money to buy another property to do the same thing again.
The main drawback with these types of loans is that they require equity in the property—which means if you don’t have enough money saved up or equity built up in your current home beforehand then this type of financing won't work out well (and may actually end up costing more than doing things another way). Another potential downside to fix & flip loans is that they aren’t ideal if you want something long term—these are by nature short term solutions while renovating/fixing up one property before moving onto another one.
 

Foreign National Home Loans

If you are a non-US citizen and are interested in purchasing a home here, then a Foreign National Home Loan may be right for you. These loans can be used by anyone living outside the United States, or by foreign nationals who have been granted permanent residency status but still live abroad. The lender will look at your credit history and income to determine whether or not you qualify for this type of loan and how much money they can lend to you based on those factors.
 

Asset Depletion home loans

An asset depletion home loan is a type of non-QM home loan that allows you to use the equity in your primary residence to fund the purchase of another property. This type of loan is available for both owner-occupied and investment properties, which means that it's an option for those who are looking to flip a property or buy it as an income property.
 
The process works like this: You get pre-approval on your new home (or homes) by showing proof of funds, then you apply for the mortgage once you have made an offer on that new house. After you finalize your purchase, the proceeds from selling your old house are given through as an asset depletion credit line against that new mortgage transaction - so essentially all you have left on closing day is one single monthly payment for two separate homes!
 

Bridge Loans

Bridge loans are short-term loans used to bridge the gap between the time a borrower is approved for a permanent loan and the time they close on the home purchase. Bridge loans are typically used for home purchases that are in the final stages of closing. The borrower will be able to use this short term mortgage to live in their new home while waiting for their permanent mortgage financing to close.
 

DSCR Home Loans

DSCR stands for Debt Service Coverage Ratio. It is a ratio used to determine the ability of a borrower to pay off their debt. This ratio is calculated by dividing monthly gross loan payments by monthly rental income. The higher your debt service coverage ratio, the better chance you have at qualifying for a loan. The DTI (Debt-to-Income) ratios are also taken into consideration when determining if you qualify for a mortgage loan or not because they show how much house you can afford based on your current income levels and expenses.
 

Ground up construction loans

Ground up construction loans are used to finance the construction of a new home. In this case, the borrower has no existing property that can be used as collateral for the loan. Instead, they must raise money from other sources to cover their down payment and closing costs.
 
The borrower must have a good credit history and enough cash on hand to cover these upfront costs before construction begins.
 

Non-QM home loans are more flexible and offer more options to fit the needs of the modern home buyer.

Non-QM home loans offer more flexibility and options for the modern home buyer. Non-QM loans allow you to make your own decisions about the loan process, which means you are in control of how your loan is handled.
 
Non-QM loans also give you more options when it comes to choosing a lender. While some lenders only offer QM or non-QM options, others may offer both types of mortgages. If you have a specific lender in mind who does not offer QM loans—or if you simply prefer to work with a non-QM lender—this can be an important consideration when deciding what type of mortgage would be best for your situation.
 

Conclusion

In conclusion, Non-QM home loans are a great option for borrowers who want to get into the housing market but don’t fit the conventional guidelines of a conventional loan. They can be used for all types of home buyers, including foreign nationals and people looking to fix & flip properties.
 

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