I want to be honest with you about something. The mortgage market is very different now than it was just a few years ago, and I think a lot of people who want to buy a home still think they can get a loan and who can get one. I've worked with borrowers on the sales side at AmeriSave for my whole career, and the change I've seen happen over the past few years is real. The line between "standard" mortgages and "everything else" has become less clear, which is good for a lot of people who used to be shut out.
The numbers support this. According to Optimal Blue's Mortgage Market Index, non-conforming loans, which include jumbo and non-QM products, made up 16.8% of all mortgages as of mid-last year. This was a 4.39 percentage point increase from the previous year. Non-QM loans alone made up a record 8% of all new loans. That means that about one out of every twelve mortgages being written doesn't fit into the usual qualified mortgage box. And experts in the field say that share could go over 15 percent by the end of this year.
Why is this important to you? The American workforce has changed, though. About one in ten workers in the United States is now self-employed, which is about 15 million people. A lot of them make a lot of money, but they have trouble showing that money in ways that traditional underwriting will accept. If you add gig workers, real estate investors, retirees with assets but not much W-2 income, and foreign nationals buying property in the US, you have a huge group of creditworthy borrowers who need financing options that aren't available through the agency.
This guide explains the most important differences between qualified and non-qualified mortgages so you can choose the best option for your needs. Whether you work for someone else and have simple finances or are self-employed and have complicated income, knowing this difference will have a direct impact on your rate, costs, and the legal protections that come with your loan.
First of all, I want to make it clear that neither type of loan is better or worse than the other. A QM loan usually has lower rates and better legal protections. A non-QM loan gives you more options, which can make the difference between owning a home and waiting years for your paperwork to fit a template that was never meant for your financial situation. The right choice depends on your own situation, and I've helped hundreds of borrowers make this choice while working in sales at AmeriSave.
Under the Ability-to-Repay rule set by the Consumer Financial Protection Bureau, a qualified mortgage is a loan that meets certain consumer protection standards. The CFPB made these rules after the financial crisis to stop the kind of careless lending that led to the housing market crash. It's simple: before a lender gives you a mortgage, they need to make a reasonable, good-faith decision that you can really pay it back.
To be a QM loan, the lender must check your current income or assets, your monthly debts, and your job status with documents like pay stubs, W-2 forms, tax returns, and bank statements. They can't just believe you. This requirement for verification brings back the accountability that was missing from most of the lending market before the crisis.
The loan also can't have some risky features. QM loans don't allow negative amortization, which means that your loan balance goes up even though you are making payments. They don't allow interest-only periods, when you only pay interest and don't lower the principal. They don't allow balloon payments, which are when a big payment is due at the end of the loan term, except for small lenders. Also, the loan term can't be longer than 30 years.
The CFPB changes the limits on points and fees every year to keep up with inflation. This year, the maximum amounts are 3% of the total loan amount for loans of $137,958 or more, $4,139 for loans between $82,775 and $137,958, 5% for loans between $27,592 and $82,775, $1,380 for loans between $17,245 and $27,592, and 8% for loans under $17,244. This calculation does not include some fees, such as government insurance premiums like FHA mortgage insurance and VA funding fees, as well as real third-party fees for services like appraisals, title insurance, and credit reports.
The last requirement has to do with the price of the loan. The current General QM definition says that for first-lien loans of $137,958 or more, the annual percentage rate can't be more than 2.25 percentage points higher than the Average Prime Offer Rate for a similar transaction. For first-lien loans between $82,775 and $137,958, it can't be more than 3.5 percentage points higher; for first-lien loans below $82,775, it can't be more than 6.5 percentage points higher; and for subordinate-lien loans of $82,775 or more, it can't be more than 3.5 percentage points higher. The Federal Financial Institutions Examination Council publishes the Average Prime Offer Rate once a week. It shows the average rates on loans that are similar in some way.
The original QM rule had a 43 percent debt-to-income cap, but this pricing-based approach took its place. The CFPB found that the price of a loan is a better and more complete way to tell if a person can pay it back than just the DTI. The change to the price-based system happened in late fall of the previous year. It's important to understand why this change happened. A borrower with a 45 percent DTI and a well-priced loan may be less likely to default than a borrower with a 40 percent DTI and a higher-priced loan because the pricing takes into account a wider range of risk factors that the lender has already looked at. AmeriSave designs its conventional loans to meet QM standards whenever possible. This gives borrowers the best consumer protections available under federal law.
This means that as a home buyer, your loan is a QM as long as your lender can give you a rate that stays within the APOR spread for your loan size, no matter what your DTI looks like. The DTI is still important for the lender's own risk assessment and for following agency rules if the loan is being sold to Fannie Mae or Freddie Mac. However, it is no longer the clear-cut QM disqualifier it used to be. That change made it possible for more borrowers to get QM protections.
The QM framework includes several categories beyond the General QM definition, and understanding them helps you see the full picture of what’s available.
Any loan eligible for purchase or guarantee by Fannie Mae, Freddie Mac, FHA, VA, or USDA automatically qualifies as a QM regardless of where the borrower falls on the pricing thresholds, as long as the government-sponsored enterprises remain under Federal Housing Finance Agency conservatorship. This provision, often called the GSE patch, means that a significant portion of the market can access QM protections through agency channels even if their individual loan metrics might not meet the General QM definition on their own. AmeriSave offers a full suite of agency-eligible products including conventional, FHA, VA, and USDA loans, all of which carry QM status through this pathway.
Community banks and credit unions with total assets under $2 billion that originate 500 or fewer first mortgages per year can make QMs that they hold in portfolio without strict adherence to the pricing thresholds. These lenders must still consider and verify the borrower’s debt-to-income ratio and other financial factors, but the relationship lending model allows them more flexibility. Small creditors can even offer balloon-payment QMs under certain conditions, which is not available to larger institutions. This category recognizes that a local banker who knows your family, your business, and your financial track record can make informed lending decisions that automated systems might miss.
This newer category, created through CFPB rulemaking, allows certain loans that did not initially qualify as QMs to earn that designation through payment performance. A seasoned QM must be a first-lien, fixed-rate mortgage that meets specific product feature and points-and-fees requirements, has no more than two 30-day delinquencies and zero 60-day delinquencies during a 36-month seasoning period, and was held in portfolio by the originator or first purchaser throughout that period. The logic is compelling: if a borrower makes on-time payments for three straight years, that track record provides strong real-world evidence of their ability to repay, potentially stronger than any underwriting calculation made at origination.
A non-QM loan doesn't meet one or more of the QM requirements. The loan's price might be more than the maximum spread above the Average Prime Offer Rate. Instead of using W-2 forms to prove the borrower's income, bank statements might be used. The loan might have a period where you only pay interest or a term that lasts more than 30 years. If the loan doesn't meet any of the QM requirements, it can't be classified as such.
This is where a lot of people get confused: non-QM does not mean bad credit. I can't say this enough. Many people who don't qualify for a QM loan have good credit, a lot of assets, and a good income. The data backs this up. Bank statement loans make up 30 to 40 percent of non-QM originations. The average borrower's FICO score is above 737, and the loan-to-value ratio is in the 60s. These are mortgages with a high credit quality for people whose income comes in a way that traditional underwriting can't handle.
Lenders who offer non-QM loans must still follow the Ability-to-Repay rule. They have to honestly decide that you can pay back the loan. They need to check your income or assets, monthly debts, credit history, and job status. The difference is that non-QM underwriting gives the lender more options for showing that they are following the rules. A non-QM lender might check the income of a self-employed borrower by looking at 12 or 24 months of bank statements instead of two years of W-2s and tax returns. They would look at the patterns of deposits to figure out the borrower's average monthly cash flow.
Legal protection is the most important difference. If a lender makes a QM loan, they are either protected from lawsuits saying the borrower couldn't afford the loan or they can prove that the borrower could afford it. Borrowers can still go to court to challenge the lender's ability-to-repay decision when they take out a non-QM loan. Lenders charge higher interest rates on non-QM loans because they take into account both the credit risk and the legal risk. But the difference in rates has gotten much smaller since institutional investors have put a lot of money into the non-QM mortgage-backed securities market. Loss mitigation rates on non-QM portfolios are less than three basis points, which shows that these loans do well when they are properly underwritten.
Since the QM rule went into effect, the non-QM market has grown a lot. Bank of America Global Research says that cumulative losses on non-QM portfolios since they started are less than 0.02 percent. This is an impressive record for any type of loan. A lot of that performance is due to the quality of the underwriting, which has improved a lot thanks to AI-assisted analysis tools, especially when it comes to looking at bank statement deposits and self-employed cash flow patterns. Non-QM used to be a niche product that investors weren't sure they wanted. What we're looking at now is a part of the mortgage market that is growing up and serving a real and growing group of borrowers with products that work.
Non-QM loans work best for certain types of borrowers. Knowing if you fit into one of these categories can help you decide if looking into non-QM options is a good idea.
The biggest group of non-QM borrowers is people who work for themselves. If you own a business, work as an independent contractor, or make money from freelance work, your tax returns probably show ways to lower your taxable income by taking advantage of legal business deductions. Depreciation, home office costs, car costs, health insurance premiums, retirement contributions, and other write-offs can make your adjusted gross income look much lower on paper. A self-employed person who makes $150,000 a year and writes off $60,000 in legitimate business costs shows $90,000 on their tax returns. That $90,000 number is what traditional QM underwriting uses. Non-QM bank-statement underwriting looks at real deposit activity to get a better picture of cash flow.
Because traditional underwriting makes it hard for portfolio properties, real estate investors often use non-QM financing. Even though their rental income easily covers the payments, many investors have debt-to-income ratios that are higher than normal. They also buy through limited liability companies that can't get GSE-backed loans. Debt service coverage ratio loans are one of the fastest-growing types of non-QM loans. They qualify the borrower based on the rental income from the property instead of their own income. As of the middle of last year, investor and DSCR loans made up almost 29% of the non-QM market, which was an increase of almost three percentage points from the year before.
Like self-employed people, gig economy workers have trouble with paperwork. Income from driving for rideshare companies, delivering food, renting out short-term spaces, doing freelance creative work, and other flexible sources can be large but hard to prove through normal means. There are non-QM programs that can help with this, like those that focus on 1099 income or bank statement analysis.
If you need money before the waiting periods set by agency guidelines have passed, non-QM may be your only option if you have had recent credit problems like bankruptcy, foreclosure, or a short sale. Depending on the event and the type of loan, traditional programs make people wait two to seven years. Non-QM lenders can look at borrowers with shorter seasoning if they have strong credit recovery, big down payments, and a lot of reserves.
Non-QM asset-depletion programs are good for people with a lot of money but not a steady income that can be documented. These programs figure out qualifying income by dividing liquid assets by a certain amount of time, which is usually 60 or 360 months. A retiree with $2 million in investment accounts but little W-2 income could qualify based on a monthly income of $33,333 using a 60-month depletion schedule.
Another non-QM niche is foreign nationals buying property in the United States. These buyers usually have a lot of money, but they don't have a credit history, a Social Security number, or proof of U.S. employment. International borrowers can use non-QM programs that accept foreign documents. These programs usually require larger down payments to make up for the higher risk.
AmeriSave helps borrowers in all of these groups find the right product for their financial situation. Not every borrower needs a non-QM loan, and not every borrower should have one. However, knowing that this option exists means you are not missing out on other options.
QM loans require traditional verification including pay stubs for the most recent 30 days, W-2 forms for the prior two years, verification of employment directly with the employer, and tax returns for the prior two years when income includes commissions, bonuses, or self-employment. Non-QM loans accept alternative documentation such as 12 or 24 months of personal or business bank statements analyzed for deposit patterns, 1099 forms for contract income, cash flow analysis for investment properties, asset statements for asset-depletion qualification, or debt service coverage calculations for rental properties.
General QM loans must price within defined spreads above the Average Prime Offer Rate, with the specific thresholds varying by loan size and lien position. Loans that exceed these spreads cannot qualify as General QMs. Non-QM loans have no such pricing restrictions, which allows lenders to price the additional risk into the rate. Historically, non-QM rates ran 1.5 to 3 percentage points above comparable agency loans. That spread has compressed as institutional capital has flowed into the non-QM secondary market, and borrowers with strong credit profiles can now find non-QM rates closer to 0.5 to 1.25 percentage points above agency pricing.
QM loans prohibit interest-only payments, negative amortization, balloon payments except for qualifying small creditors, and terms exceeding 30 years. Non-QM loans can include interest-only periods of five to ten years before converting to fully amortizing payments, 40-year terms to reduce monthly obligations, and balloon structures where a portion of principal becomes due after a set period. These features provide payment flexibility but require careful planning for the eventual adjustment.
QM loans permit down payments as low as 3 percent for conventional programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible, 3.5 percent for FHA, and zero percent for VA and USDA. Non-QM loans typically require 10 to 20 percent minimum, with many programs favoring 20 to 25 percent. Larger down payments reduce lender risk and generally improve pricing. AmeriSave evaluates each borrower’s full financial picture to determine what combination of down payment and loan program produces the strongest overall outcome.
QM lenders receive either safe harbor or rebuttable presumption protection from ability-to-repay lawsuits. Safe harbor means borrowers face very high hurdles to successfully challenge the loan in court. Rebuttable presumption shifts the initial burden to the borrower to prove the lender failed to properly assess repayment ability. Non-QM borrowers retain full ability-to-repay challenge rights, meaning they can argue in court that the lender didn’t adequately verify their capacity to repay. This legal exposure drives more conservative underwriting and contributes to the rate premium on non-QM products.
QM loans cap total points and fees based on loan size, with the primary threshold at 3 percent for loans of $137,958 or above. These caps protect borrowers from excessive origination charges. Non-QM loans are not bound by the same caps since they fall outside the QM framework, but market competition keeps pricing in check. Most non-QM lenders maintain points and fees in the 3 to 4 percent range to stay competitive. You may see slightly higher origination costs reflecting the additional manual underwriting work, but the difference is typically modest.
QM loans sold to Fannie Mae or Freddie Mac frequently use automated underwriting systems that can return approval decisions within minutes. Established guidelines, standardized documentation, and streamlined processes mean QM loans typically close in 30 to 45 days from application. Non-QM loans require more manual underwriting. Bank statement analysis, asset verification, DSCR calculations, and individualized assessment take additional time. Expect 45 to 60 days for most non-QM closings, with complex scenarios occasionally stretching longer. AmeriSave’s processing team works to keep non-QM timelines as efficient as possible, but the manual nature of the underwriting requires patience and thorough documentation.
QM loans benefit from deep secondary market liquidity through the GSE system. Fannie Mae and Freddie Mac purchase enormous volumes of QM loans, and this competition among investors drives down rates for borrowers. Non-QM loans are sold through the private-label securities market, where institutional investors including insurance companies, pension funds, and private debt funds purchase mortgage-backed securities. Kroll Bond Rating Agency projected non-QM RMBS issuance would reach roughly $67 billion last year, with estimates for this year jumping another 12 percent to approximately $75 billion. That growing investor appetite is what’s compressing the rate spread between QM and non-QM products and making non-QM financing more accessible than it’s ever been.
The difference in interest rates between QM and non-QM loans is very important over the life of the loan. Let me show you some real numbers so you can see how this works in real life.
Let's say you're borrowing $400,000 for 30 years. A QM loan with a 6.5% interest rate has a monthly payment of $2,528 for both the principal and interest. You would pay about $509,805 in interest over the full 30 years, for a total repayment of $909,805. If you take out a non-QM loan for the same amount at 7.5 percent, your monthly payment will be $2,797. The total amount to be paid back is $1,006,966, which includes $606,966 in interest over 30 years. That's about $97,000 more in interest, or $269 a month.
That's real money, and I would never lie to you about it. But the situation is important. If your income documentation doesn't meet agency standards and the only way to buy a home is with a non-QM loan, paying an extra $269 a month to build equity in a home may be better than renting for a long time while you wait for your finances to improve. Also, the difference in rates doesn't have to last forever. Many non-QM borrowers use the loan as a bridge to buy a home now and then refinance to a lower-rate QM loan when their situation changes. If you refinance after two years, you will have paid about $6,456 in extra interest during that time, not $97,000. AmeriSave often helps borrowers move from non-QM to conventional financing as their income or paperwork changes.
The math also changes depending on how much you put down. A bigger down payment lowers the principal, which lowers the total interest. If you put down 25% instead of 20% on a $500,000 purchase, you will only have to borrow $375,000 instead of $400,000. That saves about $69 a month in principal and interest, or about $24,900 over the full term, at 7.5 percent over 30 years. A non-QM lender might offer 7.25 percent for 25 percent down instead of 7.5 percent for 20 percent down, which would save you an extra $56 a month on a $375,000 balance.
Start by gathering your documentation: pay stubs for the prior 30 days, W-2s for the past two years, the most recent two months of bank statements for all accounts, retirement account statements, and two years of personal tax returns if your income includes commissions, bonuses, or self-employment earnings. If you’re purchasing, you’ll also need a signed purchase agreement and proof of earnest money. For a refinance, gather your most recent mortgage statement, homeowners insurance declaration page, and current property tax bill.
Your lender will pull credit from all three bureaus and use the middle score for qualification. They’ll order an appraisal, verify your employment at least once during underwriting and again shortly before closing, and run your application through an automated underwriting system like Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector. If the AUS returns an approval, the underwriter reviews your documents against the findings, issues any conditions that need to be satisfied, and ultimately clears the loan for closing. Expect 30 to 45 days from application to closing for a purchase, sometimes faster for a refinance.
The initial application is similar, but the documentation varies based on the program. For bank statement programs, you’ll provide 12 or 24 months of personal or business bank statements. The lender analyzes deposits, removes non-recurring items, and calculates average monthly income, often applying an expense factor of 30 to 50 percent for business accounts. For DSCR programs, the property’s rental income drives qualification, so you’ll need a rental appraisal or lease agreement showing current or projected rents. For asset-based programs, comprehensive documentation of liquid assets is required, and income is calculated by dividing total assets by the amortization period.
Manual underwriting takes longer than automated systems. A senior underwriter reviews your complete financial picture individually, considering compensating factors and making an approval decision based on the lender’s guidelines. Non-QM lenders commonly require six to twelve months of reserves in liquid assets after closing to demonstrate financial cushion. Plan for 45 to 60 days from application to closing, and expect that complex scenarios may require additional time.
After years of big swings, the mortgage market as a whole has reached a time of relative stability. Optimal Blue says that the 30-year conforming rate was 6.72 percent at the end of last year, which is about the same as it was a year before at 6.67 percent. Average FICO scores stayed the same for all types of loans. Conforming loans had an average score of 755, FHA loans had an average score of 675, and VA loans had an average score of 713. The Mortgage Bankers Association and Fannie Mae both say that rates will stay between 6.0 and 6.5 percent this year. However, because of uncertainty about economic policy, it's hard to say which way rates will go.
The non-QM market has been the most impressive growth story in that stable environment. According to Kroll Bond Rating Agency projections, non-QM RMBS issuance was on track to set a record of more than $66 billion last year. This year's estimates are close to $75 billion. The secondary market for securitized home equity loans has also been growing, with closed-end second-lien volume leading the way. More and more, insurance companies, pension funds, and private debt managers see non-QM loans as good investments that pay higher interest and have a track record of success. Since they started, non-QM portfolios have lost less than 0.02 percent of their value. This track record has given institutions a lot of confidence.
The supply side has also grown. Larger lenders that used to only offer agency products are now getting into the non-QM space. This is in addition to the smaller and mid-sized firms that have been driving the market's growth. This competition is good for borrowers because it makes prices better and products easier to find. Meanwhile, improvements in AI-assisted underwriting, especially for looking at bank statements and the cash flow of self-employed people, have sped up processing times and made loans better. AmeriSave's products show how this has changed. They now offer both agency-eligible QM products and flexible non-QM solutions for borrowers whose income or financial profile doesn't fit with traditional guidelines.
If you've been hesitant about non-QM because you thought it was riskier or had worse terms, now is the best time for borrowers in this segment. Non-QM products are easier to get, cheaper, and easier to understand than they have been since the QM rule went into effect. This is because there is more competition, more support from investors, and better underwriting technology.
Second-lien lending is also one of the fastest-growing parts of non-agency origination. With tappable home equity over $11 trillion and most mortgage holders stuck with first-lien rates below 5% since the pandemic, more and more borrowers are choosing second liens and HELOCs over cash-out refinances that would reset their low first mortgage rate. Closed-end second-lien volume has been the most important thing in this space, and the secondary market for securitized home equity loans has grown along with it. For homeowners who already own property and want to tap into their equity without changing their mortgage, non-QM second-lien products offer a way that didn't exist at this scale even a few years ago.
Whether you should get a QM or a non-QM loan depends on your own situation. The best thing to do is to honestly look at where you stand on a few key points.
If you get most of your money from W-2 wages, your debt levels are manageable compared to your income, you can easily provide standard documentation, you qualify for government-backed financing through FHA, VA, or USDA, or you want the lowest interest rate and the best legal protections, you should get a qualified mortgage. QM loans are good because there is a lot of liquidity in the secondary market, a lot of lenders compete with each other, and the regulatory framework has built-in protections for consumers. All of AmeriSave's conventional, FHA, VA, and USDA loans meet QM standards.
If you're self-employed and your tax returns don't show how much money you really make, you make money from more than one gig economy source, you're a real estate investor who needs DSCR-based financing or is buying through an LLC, you're a foreign national without a U.S. credit history, your debt-to-income ratio is higher than what agency guidelines allow, you need a specific loan feature like interest-only payments, you had a recent credit event and need financing before traditional waiting periods end, or you have a lot of assets but not a lot of documented income, look into non-QM options.
You can figure out which way to go by taking a few simple steps. First, figure out your debt-to-income ratio by adding up all of your monthly debt payments and dividing that number by your gross monthly income. Second, be honest with yourself about whether you can make the standard paperwork that QM loans need. Third, get your credit reports from all three bureaus and check them for mistakes. Fourth, figure out how much you can put down as a down payment. If it's less than 10%, you can only use QM-eligible programs. Fifth, talk to more than one lender and be honest about your money problems right away. You can make an informed decision about QM and non-QM products with AmeriSave's help. They can look at your whole situation and tell you where you stand.
And keep in mind that you can have more than one type of loan at the same time. When traditional financing isn't available, a lot of borrowers use a non-QM loan to buy a house. Then, when their paperwork, income profile, or credit history changes to meet agency standards, they refinance to a QM loan. The non-QM loan is a way to get from one place to another, not a permanent home.
I think the biggest mistake home buyers are making right now is thinking they either qualify for a standard mortgage or they don't qualify at all. Things are a lot more complicated than that. The difference between QM and non-QM does not show how creditworthy someone is. It's a regulatory category that decides what rules your loan must follow and what protections it offers.
If you work for a company and have clean paperwork and debts that you can handle, a QM loan will almost certainly give you the best rate and terms. If your finances are more complicated, like if you're self-employed, an investor, or someone whose income doesn't fit into a standard template, there are non-QM products that are made just for you. The market for these products is stronger and more competitive than it has ever been.
It's okay to have questions about this, and you should get answers you can trust. Getting a mortgage is not easy, but it is possible. The AmeriSave team talks to borrowers about all of the products we offer. The first thing they do is figure out where you are, where you want to be, and the best way to get there. That's what this is all about. Your home, your financial future, your choice, made with the right information in front of you.
The main difference is how the law and regulations treat them. The Ability-to-Repay rule from the CFPB sets specific rules for QM loans. These include limits on loan features, pricing thresholds based on the Average Prime Offer Rate, points-and-fees caps, and income verification. Lenders who make QM loans get legal protection from lawsuits about their ability to repay. Non-QM loans don't meet one or more of these requirements, which means the lender is still fully responsible in court. This higher risk makes underwriting more careful, which usually leads to higher interest rates. It is important to note that non-QM lenders must still find other ways to check that the borrower can repay the loan. Look into AmeriSave's mortgage options to find the one that works for you.
No, non-QM and subprime are two completely different types. Subprime refers to people who want to borrow money but have bad credit, low scores, and a high risk of default. Non-QM is a regulatory term that means the loan doesn't meet QM standards. This is usually because the borrower doesn't show their income in a traditional way, not because their credit is bad. The average FICO score for non-QM loans based on bank statements is over 737, and the loan-to-value ratios are in the 60s. Some non-QM borrowers have better financial profiles than some QM borrowers. One of the biggest mistakes people make when getting a mortgage is not knowing the difference between these terms. For more information on different types of loans, go to AmeriSave's learning center.
Automated underwriting systems and standardized processes help QM loans close in 30 to 45 days from the time they are applied for. It usually takes 45 to 60 days to get a non-QM loan because the bank has to do manual underwriting to look at bank statements, calculate the DSCR, or do a personalized financial assessment. If there are a lot of different income sources, unusual types of property, or a lot of asset verification, the timeline may be even longer. Sometimes, experienced non-QM lenders with good systems can close simpler non-QM files in 45 days or less. Setting realistic expectations from the start keeps you from getting upset. AmeriSave can help you find out the current rates and timelines.
Yes, and this is a common way to do things. A lot of people who don't qualify for a QM loan use the loan as a bridge to buy property when they can't get traditional financing. Then, when their situation changes, they refinance to a QM loan. A self-employed person who wants to borrow money might start with bank-statement non-QM financing and then switch to conventional QM after two years of tax returns that show steady income. After the required waiting period, a borrower who has recently had a credit event may be able to switch to FHA financing. Once the property's rental history is set, an investor might refinance from DSCR non-QM to a portfolio product. The most important thing is to know what financial changes would make you QM-eligible and work toward them. Visit amerisave.com/loan/refinance to learn more about refinancing.
Different lenders and program types have different minimum scores. Most bank statement programs need scores between 620 and 680. Higher scores mean lower rates and smaller down payments. If the property cash flow is good and the down payment is big, DSCR programs for investment properties may accept scores as low as 640 to 660. Asset-depletion programs usually need between 680 and 720 because they only look at assets and not documented income. Because it's hard to check international credit, many foreign national programs need a score of 700 or higher. Higher scores always make the terms better, no matter what kind of program it is. With AmeriSave's prequalification tool, you can look at all your options.
It depends on the program and the amount of the down payment. Most non-QM lenders want at least 15% to 20% down, which keeps the loan-to-value ratio at or below 80% to 85%, so you don't need mortgage insurance at all. Some programs let you put down as little as 10% of the total cost. In this case, the lender may want you to get a different type of insurance. Most of the time, private mortgage insurance companies don't cover non-QM loans. Instead, lenders may use borrower-paid rate adjustments or lender-paid insurance that is passed on as a slightly higher rate. When you look at AmeriSave's home loan options, be sure to ask about the insurance requirements and how they will affect your monthly payment.
Yes. You can get non-QM loans for your main home, a second home, or an investment property. Primary residences usually get the best prices, followed by second homes and then investment properties. People who work for themselves and are buying their first home often use bank-statement programs. Retirees who buy their main home or a vacation home use asset-depletion programs. The only exception is DSCR loans, which are only for investment properties and are based on rental income rather than personal income. When you apply for non-QM financing, tell your lender how you plan to use the money up front so they can give you accurate rates and terms.
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