A non-QM loan is a mortgage that does not meet the standards set by the qualified mortgage (QM) rule established by the Consumer Financial Protection Bureau. Non-QM loans may have flexible credit and income requirements, but do come with higher interest rates and fees.
Non-QM loans, or “non-qualified” mortgage loans, are mortgage loans that do not meet the standards set by the Consumer Financial Protection Bureau’s “qualified” mortgage rule. This rule established guidelines for mortgage lenders to ensure that borrowers have the ability to repay their loans. Non-QM loans may be an option for borrowers who do not meet the qualifications for a qualified mortgage, such as those with a high debt-to-income ratio or a non-traditional credit history. Non-QM loans may have more flexible underwriting guidelines and may be available to a wider range of borrowers, including self-employed individuals or those with nontraditional income sources. However, non-QM loans may also have down payment requirements and higher interest rates and fees compared to qualified mortgages. If you are unable to qualify for a traditional mortgage loan, a non-QM loan may be worth considering.
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