Non-QM loans: thinking outside of the box
For self-employed individuals and investors, qualifying for a mortgage under traditional guidelines can be difficult. Non-QM (non-qualified mortgage) loans offer a more flexible alternative, providing financing solutions that don’t rely on standard income documentation. These loans cater to those with non-traditional income streams, making homeownership and real estate investing more accessible.
What is a non-QM loan?
A non-QM loan is a mortgage that does not meet the “Qualified Mortgage” (QM) criteria set by government regulations but provides a viable financing option for those who fall outside traditional lending guidelines. These loans are designed for borrowers or properties that don’t fit traditional mortgage standards, offering alternative qualification methods such as bank statements, assets, or rental income instead of tax returns and paystubs. This makes them especially useful for self-employed individuals and real estate investors who need a more flexible approach to securing financing.
What type of non-QM loans does Solcosta Home Loans offer?
At Solcosta Home Loans, we’re here to help you find the right mortgage solution for your unique financial goals. Our commitment to innovation extends to non-QM and investor loans. Here we will explore two of the most popular non-QM loan options: bank statement loans and debt-service coverage ratio (DSCR) loans. These choices can be your path to achieving homeownership or realizing your investment dreams.
Bank statement loans: designed for the self-employed
Traditional mortgage guidelines can make it difficult for self-employed borrowers to qualify. Bank statement loans provide a way to qualify without relying on tax returns.
- Income based on deposits: Qualifying income is calculated from eligible deposits averaged over 12 or 24 months of bank statements rather than taxable income.
- Streamlined documentation: No personal or business tax returns are required, making the process simpler and more straightforward.
Asset-based loans: qualifying using assets instead of income
Some borrowers have substantial liquid assets but limited reportable income. Asset-based loans allow you to qualify using your verified assets rather than traditional income documentation.
- Income derived from assets: Eligible assets such as checking, savings, brokerage, or retirement accounts are divided over a set term to calculate qualifying income.
- Ideal for high-asset borrowers: Works well for retirees, high-net-worth individuals, or anyone with substantial reserves but limited reportable income.
DSCR loans: focused on property income
DSCR loans are designed for real estate investors and are qualified based on the property’s cash flow rather than your personal income.
- Personal income not required: Approval is based on the property’s proposed rental income compared to the new mortgage payment. No personal income documentation is required.
- Designed for investors: Whether you are purchasing your first rental property or expanding your portfolio, prior investment experience is not required. DSCR loans are available to borrowers who already own a primary residence or another investment property.
Other Non-QM options
In addition to bank statement loans, asset-based loans, and DSCR loans, we also offer other non-QM options such as profit & loss (P&L) and 1099-only loans. Whether you’re self-employed, exploring investment opportunities, or seeking alternatives to traditional mortgages, our non-QM options can be tailored to your unique financial situation and goals. Contact us to learn more!
Working with Solcosta Home Loans
• Since we are a mortgage broker and not a bank, we have the ability to shop multiple lenders to get you the best deal possible.
• We offer a wide variety of loan products, and we can help you find the loan that is right for you!
• We are fast and efficient and have the ability to close most of our loans in 18 days or less.
• We are locally owned and operated in Northern California. That means when you call or email us, you will be speaking with us directly.
