Non-QM loans have led to the thriving of the house mortgage business. The loans are not certainly higher risk loans. And so, loanees do not follow standards such as more reserved cash and a higher score on credit. Qualified Mortgage (QM) provides lenders protection from liability brought by borrowers. Non-QM loans are given to consumers with low credit who have little assets for collateral.
How to get a loan with a low credit score
Types of non-QM loans include:
- Stated income-this is a loan given when one provides a documented proof of income.
- Not fully documented. You can still get a non-qm mortgage even when you have assets available, employment history and good credit. This happens when you don’t provide full documented income proof.
- Interest only. Were loans that were very popular in the past but today they are classified under no-QM loans.
- Higher debt to income ratio: Jumbo loans with 43% and higher DTI qualify as non-QM loans.
- A 40-year loan term. Any loan for more than 30 years is a non-Qm loan.