Non-QM Mortgages For Bad Credit And No Income Docs

Homebuyers and homeowners who were told they do not qualify for a traditional government, conventional, or jumbo loan, Non-QM Mortgages can be the solution in getting a mortgage loan approval. The various types of non-QM and alternative loan programs available today offer an opportunity for homebuyers to qualify for a specialty non-QM alternative financing mortgage loan program who otherwise would not have qualified. Many mortgage loan applicants who cannot meet the lending guidelines and requirements of lenders on traditional conforming loans due to credit, income, debt to income ratio caps, recent bankruptcy and/or foreclosure, or other qualification issues may have good chance lenders of non-QM mortgages can help.  In this article, we will discuss and cover the various types of non-QM mortgages and the best home loan options.


Florida Non-QM Mortgages

 If you have been following the news, then you more than likely are aware of the housing market being on fire nationwide. Many taxpayers from high-taxed states with high-cost of living are fleeing to states with lower taxes, affordable housing, and low cost of living. One of the strongest housing markets in the United States with one of the highest migration numbers of taxpayers and businesses is currently in the state of Florida.

Non-QM Mortgage Options For Homebuyers

There are many different reasons for this which we will discuss. Since so many Americans are moving to Florida, many of them are using NON-QM mortgages, especially retirees with substantial assets but limited to qualified income to qualify for a traditional mortgage.  In this blog, we will discuss what a NON-QM mortgage loan means, what type of NON-QM mortgage loans are available in Florida.

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Non-QM Mortgages Gives Homebuyers Who Could Not Qualify For Traditional Mortgages Qualify For A Home Loan

Many borrowers are not familiar with the term NON-QM mortgages. This term simply means a non-qualified mortgage. A qualified mortgage (QM) is exactly what you think of when you hear the word “mortgage”. A mortgage securitized by Fannie Mae, Freddie Mac (Conventional loans), the U.S. Department of Veterans Affairs (VA Loans), the U.S. Department of Housing and Urban Development (HUD on FHA loans), or the U.S. Department of Agriculture Rural Development (USDA loans). So, your everyday Conventional, VA, FHA, and USDA mortgage loans are considered qualified mortgage products. Non-QM loans give home buyers who could not qualify for traditional loans an opportunity to qualify for owner-occupant homes, second homes, and investment properties.

What Are Non-QM Mortgages? 

A non-qualified (NON-QM) mortgage product is simply any mortgage program that is not insured and backed by the federal government or conforming to Fannie Mae and/or Freddie Mac GSE guidelines. Non-Qualified mortgages are portfolio loans. This means that these loans are either held by the lender or sold on the secondary market to large hedge funds, and financial institutions. Many insurance companies funds, money management holding companies, and global financial institutions offer mortgage programs with their own qualification requirements. 

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Using Non-QM Mortgages Versus Traditional Home Loans

Why would somebody need to use a NON-QM mortgage loan? This is a great question and one that can be answered quickly. If you do not fall into your qualified mortgage loan qualifications, a NON-QM mortgage loan may be an option for you. A NON-QM mortgage loan will allow recent derogatory credit events as well as alternative methods for calculating income to pay your mortgage loan. 

Difference Between Non-QM Versus Traditional Government-Backed And Conventional Loans

Traditional government and conventional loans. The four traditional loan programs are FHA, VA, USDA, conventional loans.  FHA, VA, USDA loans are backed and insurance by the federal government. Conventional loans are not backed by any government agency. However, conventional loans need to conform to Fannie Mae and/or Freddie Mac agency guidelines.

Conforming Versus Non-QM Mortgages

Conforming Versus Non-QM Mortgages

Fannie Mae and Freddie Mac are the two mortgage giants that purchase the bulk of the mortgages in the secondary market. Traditional government and conventional loans have agency lending guidelines for borrowers. Non-QM mortgages have individual separate lending requirements depending on each non-QM wholesale lender. 


Non-QM Mortgages For Self-Employed Borrowers

If you are a self-employed individual, you may know how difficult it can be to purchase a home based on your income filed on Federal tax returns. Most self-employed borrowers utilize tax write-offs to minimize their tax burden, which will count against you when trying to qualify for a mortgage.

12-Month Bank Statement Mortgages With No Income Tax Returns Required

A NON-QM mortgage loan may allow you to utilize your bank statements to calculate income. These NON-QM mortgage programs will use business-related deposits as a source of your income to buy or refinance a property. NON-QM mortgage lending also can help if you have recently had a derogatory credit event such as a short sale, foreclosure, or bankruptcy. The seasoning requirements after these adverse events are minimal or even non-existent. 


Non-QM Mortgages For Investment Properties 

If you are a real estate investor, there are numerous NON-QM mortgages that may help you purchase more rental properties versus conforming loans. If you have numerous rental properties, there’s a good chance you claim a loss on your Federal tax returns at the end of each year. Unreimbursed business expenses can impact your mortgage qualifications to purchase future properties.

Rental Property Cash-Flow Non-QM Mortgages

Rental Property non-QM loans is a special mortgage program geared towards investors of rental properties that allow purchasing an investment home as long as the rents are received to cover the mortgage payment. These programs typically require 20% or 25% down but do not have income qualifications. They will simply qualify you based on the future rents received for the property. These programs have been incredibly popular in the past few years. For more information on these programs please call 630-659-7644 or email

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Non-QM Jumbo Loans With  Low Down Payment 

Non-QM Jumbo Loans With  Low Down Payment 

Besides bank statement lending and investor cash flow mortgage lending, NON-QM products also allow you to purchase homes in the jumbo market. You can even utilize a 5% to 10% down payment to purchase a home with a non-QM jumbo mortgage.

Mortgage Options With Alternative Lending Products

These alternative special mortgage loan programs are geared to help Americans purchase homes when they may not qualify for their everyday traditional jumbo mortgage. Please note the 5% to 10% down payment non-QM- jumbo loan program does require a minimum of 12 months of reserves. Jumbo mortgage qualifications can be very hard to qualify for, especially for self-employed individuals, making NON-QM options very popular.

Florida Non-QM Mortgages

All of these programs are currently available in the state of Florida. If you are like thousands of Americans and plan to move to Florida, it may be best to purchase a home versus rent. Buying a home will lock you into your monthly payment for the foreseeable future. Rents will continue to increase over the next few years. The Miami area saw the highest increase in rental costs in the past 12 months. The cost of rent increased 30% in this area. If you currently are renting in the area, we are sure you have seen these increases. Buying a home will help you stabilize your budget and build equity. 

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Non-QM Loan Requirements Florida

Why are so many people moving to Florida? Florida is the most southeastern state in the country. Florida is bordered by Alabama, Georgia, the Atlantic Ocean, and the Gulf of Mexico. Florida has a subtropical and tropical climate in the southern region. The only other state that has a tropical climate in the United States is Hawaii. Florida has a strong agricultural industry and produces citrus fruits, strawberries, nuts, sugarcane, and even cattle. Florida also has an incredibly strong tourist industry. With numerous theme parks and the Everglades, many Americans choose to travel to Florida for vacations.

Homebuyers Migrating To Florida Due To Strong Economy And Affordable Housing

Florida’s economy ranks among the largest in the world. It has the fourth-largest economy in the United States. The major sectors of the Florida economy are trade, transportation, utilities, education and health services, and tourism. And personal income in the state of Florida is right in the middle of the pack among other states. Currently ranked 26 in the nation with a personal income of roughly $47,000 per year. Note Florida does NOT have state income tax allowing their citizens to keep more of their paychecks in their pocket!

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Florida Is The Most Popular State For Americans Moving From Other States

The current reason people are moving to Florida. According to, more Americans moved to Florida than any other destination during 2020. According to this data, 65% of the people who moved to Florida were between the ages of 25 and 44. This could dramatically change the average age throughout the state. While some of this data may be anecdotal and opinionated, the current COVID-19 restrictions and how the state of Florida is handling them have attracted thousands of Americans.

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Florida Continues To Lead Movers Than Any Other State In The Nation Amid The Pandemic

Florida Continues To Lead Movers Than Any Other State In The Nation Amid The Pandemic

The pandemic has created tension in how states govern their populations across the nation. The state of Florida was one of the most wide-open states throughout the entire pandemic. Many schools never even closed. This has attracted many people with the mind state of freedom over security. Some have demonized Governor DeSantis, and some have praised him. But the facts of the matter show Florida has some of the lowest COVID-19 cases as of today (some say this is due to the hot climate). Florida’s economy has stayed consistent throughout the pandemic because of minimal restrictions placed on the population. Florida is growing at a crazy rate and if you are trying to enter the housing market you may be better off doing it sooner than later.

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Conforming Loan Requirements

Traditional mortgage loans, also called conforming loans, are the most conservative of mortgage products. There are two types of traditional mortgage loans:

Government Loans:

  • FHA Home Loans
  • VA Mortgages
  • USDA Loans

Conventional Loans:

  • Fannie Mae
  • Freddie Mac

There are non-QM loan programs that are not government or conventional loans. Non-QM loans are portfolio loans and have their own lending requirements depending on the wholesale portfolio lender.

Understanding Government And Conventional Loan Requirements

Government Loans are originated and funded by a particular government agency in the event borrowers default on their loan. Lenders fund government loans at low mortgage rates and low down payment and/or no down payment due to the government guarantee.

Down Payment Requirements On FHA And Conventional Loans

In order for the government to guarantee lenders against the borrower defaulting on government loans, lenders need to follow the agency lending guidelines. They have established guidelines for borrowers’ credit scores, incomes, and minimum down payments. For example, a lender may require a credit score between 620 and 740 to make a conventional loan. Sufficient income to pay the mortgage amount applied. Down payment requirements are between 5 and 20 percent on conventional loans. HUD requires 580 credit scores for 3.5% down payment FHA purchase loans. Borrowers with 500 and 579 can qualify for FHA Loans with an approve/eligible per Automated Underwriting System approval. Any borrowers under 580 credit scores and down to a 500 FICO, FHA requires a 10% down payment.

Conforming Mortgage Guidelines

Conventional loans require borrowers to conform to Fannie Mae and/or Freddie Mac Guidelines. Conventional Loans are also called conforming loans. Any home loans that do not conform to Fannie Mae and/or Freddie Mac or government agency guidelines are called no-QM loans or non-conforming loans. Jumbo Mortgages are called non-conforming loans because Fannie/Freddie’s max loan limit is $647,200. Any loan higher than $647,200  is called Jumbo Mortgages or non-conforming loans. The market for this type of product includes buyers with excellent credit and ready down payment.

Fixed Rates Mortgages

A traditional mortgage, in its purest form, is a fixed-rate instrument. This product allows borrowers to lock in their interest rate. Most fixed-rate loans are for terms of 15 or 30 years. However, the term can be any length of time that the lender and borrower agree upon.  Perhaps 15 or even 40 years. Generally, the shorter the term, the lower the interest rate. Under the terms of a fixed-rate loan, the loan payment is the same each month for the life of the loan. If it is important for a buyer to be able to budget exactly his or her mortgage obligation over the long term, a fixed-rate loan is a very dependable product. Fixed-rate loans are also attractive to home buyers purchasing in a low-interest-rate environment. Several costs are incurred with traditional loans, explained next.

Origination Fees And Closing Costs On Mortgages

Origination fees are upfront charges for making a loan. All purchase and refinance transactions consist of closing costs. They serve as compensation for putting the loan in place.

Origination fees cover the following:

  • processing the application
  • underwriting fee
  • funding fee
  • other administrative services

Closing Costs can be the following:

  • origination fees
  • appraisal costs
  • title charges
  • recording fees
  • pre-paid (escrows)
  • one year homeowners insurance
  • attorneys fees
  • any other third party charges

Private Mortgage Insurance On Traditional Mortgage Loans

Private mortgage insurance (PMI) is distinguished from the mortgage insurance associated with FHA and Veterans Administration loans.

Private mortgage insurance (PMI) is distinguished from the mortgage insurance associated with FHA and Veterans Administration loans. Private mortgage insurance is purchased in the private sector to protect the lender if the borrower defaults. PMI is generally required under a conventional loan—and most loans—when the borrower makes a down payment that is less than 20 percent of the appraised value of the home. Premiums are paid monthly until the loan-to-value (LTV) ratio reaches 80 percent. The LTV is calculated by dividing the loan amount by the value of the collateral used for the loan. In order to eliminate PMI, lenders require an approved appraiser to conduct an appraisal of the property and the loan to value needs to be less than 80%.

NON-QM And NON-Conforming Versus Traditional Mortgage Loans

There are instances where homebuyers cannot qualify for traditional mortgage loans and need to seek alternative financing. NON-QM Loans are non-conforming loans that give homebuyers who do not qualify for traditional mortgage loans the opportunity to purchase a home now and refinance later. Agency Guidelines require a mandatory waiting period after housing event (foreclosure, deed in lieu of foreclosure, short sale) to qualify for government and/or conventional loans.

NON-QM Loans do not require waiting period requirements after the housing event. Home Buyers may not qualify for Jumbo Loans because they do not have 700 plus credit scores. NON-QM Loans only require 620 credit scores.

Non-QM Loans Versus Traditional Mortgage Loans For Self-Employed Borrowers

Self Employed Borrowers may not qualify for traditional mortgage loans because of massive losses on tax returns.

However, bank statement mortgage loans for self-employed borrowers do not require any income tax returns. Bank Statement Loans for self-employed borrowers average 24 months personal and/or business bank statement deposits and that monthly average is used as borrowers’ monthly income. There are no private mortgage insurance requirements with Non-QM loans and bank statement loans for self-employed borrowers. 10% to 20% down payment is required and the amount required depends on borrowers’ credit scores.

Starting The Qualification And Pre-Approval Mortgage Process 

CLN are experts in non-QM mortgages. Please call us today to discuss your scenario further. Call Mike Gracz on 630-659-7644. You may also email details of your scenario to Mike is a NON-QM expert and Capital Lending Network has numerous different wholesale NON-QM investors. We will shop your scenario around to get you the best loan terms possible. Our processing team is also experts in getting your NON-QM mortgage loan to the finish line. For an easy smooth process for any loan program, you’re looking for please contact our team today.

Related> Difference between traditional and FHA loans

Related> Alternatives to a traditional mortgage

Related> Definition of mortgage loan

Michael Gracz NMLS 1160212 is a veteran mortgage loan officer at Nexa Mortgage LLC. Mike can help borrowers with less than perfect credit and higher debt-to-income ratios. Due to Nexa Mortgage being a no overlay lender on government and FHA Loans, Mike can structure any less than perfect borrowers' files and help them qualify for a home loan in a matter of a short time. It is not if you can qualify for a mortgage with Mike but when. Mike Gracz can be reached at 630-659-7644 or email at

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