Introduction
Non-QM mortgages are loans that don't meet the requirements of qualified mortgage (QM) status. This means that the loan must meet specific guidelines set by both the federal government and individual lenders in order to qualify as a QM. These guidelines include setting standards for underwriting, such as verifying income and creditworthiness of borrowers, as well as requiring certain types of documentation such as W-2s or pay stubs.
There are a variety of programs available for non QM loans.
Non-QM loans are available for owner occupied properties, foreign national home purchases and non owner occupied properties like investment properties or second homes. However not all lenders will offer each type of non-QM loan so you'll need to do your research before choosing one over another based on interest rates or fees involved.
Foreign National Home Loans
This type of home loan is designed for foreign nationals who have established residency in the U.S., but have not yet become citizens. In order to qualify, you must prove that you have been living in the country for at least three years and pass a background check.
Foreign national home loans are typically lower than conventional mortgages because lenders assume additional risk when making these loans. The main reason foreign nationals may be able to afford higher-priced homes than typical Americans is that their salaries are often higher overseas, even after adjusting for cost of living differences between countries (i.e., how much more expensive it is to live in certain cities).
Owner Occupied Home Loans
Owner-occupier loans are designed for borrowers who want to buy a home. Borrowers can use an owner-occupied loan to purchase any type of property, from a condo in the city to a house on the beach. If you're buying a second home or vacation home, this type of mortgage will allow you to build equity in it over time just like any other investment.
Non-Owner Occupied Property Loans
Non-owner occupied property loans are typically used to purchase an investment property, such as a second home, rental unit, or another form of commercial real estate. While there are many variations of this type of loan, they all have one thing in common: the borrower does not plan to live in the home purchased with this mortgage.
Conclusion
For most people, a mortgage is the largest financial commitment they’ll ever make. Therefore, it’s important to understand the different types of mortgages available and what they mean for you.