Mortgage lending is a detail-oriented endeavor, and anyone who has bought a home and gone through the underwriting process can likely verify this. When you work with a lender like Lendexa mortgage, our expert analysts are working to ensure that your loan will meet all of the restrictive guidelines for your specific loan type and gather any documentation we will need. The work our team puts in upfront ensures that you will be able to pay back your loan on time and without issue.

While this level of documentation is required for most traditional financing options, there are alternative options for buyers who may not “fit into the mold” of a standard homebuyer.

For these clients, we can explore “non-qualified mortgages” – commonly referred to as non-QM loans – which fall outside of the requirements set forth by the federal government and the Consumer Finance Protection Bureau (CFPB).

Non-QM loans do not need to meet common requirements set in place for conventional, FHA, or VA loans. In many ways, these loans avoid federal oversight that allow for the same flexibilities subprime mortgages offered before the 2008 housing crisis. Although this may sound unappealing, this does provide a route to homeownership for buyers who might feel excluded from the current qualified mortgage loan guidelines.

Some of the key items with non-QM flexibility are “ability to repay” rules (income-based qualification), minimum credit requirements, and loan repayment rules (interest only, negative amortization options).

Although non-QM loans provide leniency for non-traditional borrowers, they come at the cost of higher interest rates, origination fees, and longer closing timelines. There is likely no advantage to pursuing a non-QM loan if a conventional loan is available to you, as these loans also come with a higher risk of default if you are ultimately unable to repay the loan.

When traditional financing is not possible, we recommend consulting one of Lendexa mortgage experts, who can help you weigh the risks against the rewards.