First things first. If you’re new to mortgages, it’s important to note that there is a variety of loan programs available to choose from, each designed with different homebuyers in mind. From credit history to debt, income to savings, and investments to assets, no two borrowers have the same financial profile. Securing a home loan built to work for your specific needs, is key when it comes to achieving your homeownership dreams.
What is a Non-Qualified Mortgage (Non-QM Mortgage)?
Simply put, non-qualified mortgages = non-traditional borrower options. Non-qualified mortgages (non-QMs) are ideal financing solutions for borrowers who may not meet the qualifying criteria for traditional mortgages. Unlike FHA, VA, or Conventional loans, and other qualified mortgages, non-QM qualifying criteria may be more lenient, in comparison, and less restrictive.
Non-QMs Are on the Rise Among Homebuyers
Since no two homebuyers share the same financial make-up, it’s important that your needs are met with a home loan that puts you on the path toward your homeownership dreams.
Non-QMs are becoming an attractive mortgage choice for more borrowers. The Non-QM market share is projected to double in 2022. What this means is, the mortgage industry is anticipating a larger shift in borrower needs, and projections are pointing to more homebuyers turning to non-qualifying mortgages to buy their home.
What is causing a shift in borrower needs and demand? A few things: Between the housing market’s high demand and low inventory, compounded with the potential for rising interest rates, many homebuyers are facing challenges when it comes to buying a home. Additionally, challenges become especially difficult for borrowers who don’t fall within traditional qualifying guidelines.
Who are Non-QMs for?
A variety of borrowers may choose to finance their home with a non-QM, including:
- Self-employed borrowers
- Freelancers, gig economy workers
- Real estate investors
- Borrowers with high net-worth
- Commission-based homebuyers
- Business owners
- Homebuyers with investments, trust funds, large assets, or low reportable income
- Borrowers with high debt-to-income ratios
- Homebuyers with less-than-perfect credit
From investment properties and vacation homes to first-time homebuyers and repeat buyers, there’s a variety of non-qualified mortgages that could work for you.
3 Non-QMs to Know: Newrez Smart Series
Our Smart Series is a full suite of non-QM loans comprised of three key loan types, each tailor-made to satisfy borrowers and their non-traditional qualifying needs.
- SmartSelf is ideal for self-employed borrowers requiring the use of bank statements and/or asset amortization to qualify, compared to traditional income requirements that require W-2s. The best part? Alternative income documentation to qualify for a mortgage! If tax returns are making it impossible for you to qualify for a traditional mortgage, this loan could be the perfect solution.
- SmartEdge offers competitive financing solutions for borrowers who fall just outside of standard agency and prime jumbo programs due to a credit event or other isolated lapse in their credit performance. If your big homeownership dreams require a big home loan to match, but you’ve also experienced a credit mishap along the way, this loan could be the gateway to homeownership for you.
- SmartVest: is designed for experienced real estate investors seeking to purchase or refinance an investment property that is owned for business purposes. With this loan, not only can borrowers purchase additional investment properties with less documentation compared to Conventional loans, but borrowers also have the option to access equity in a current portfolio of homes to purchase additional properties or use the market rent (cash flow) from the subject property to qualify.
Pros of Non-QMs and Smart Series
With non-qualified mortgages, and particularly Smart Series, borrowers have access to financing solutions that could make more sense for their finances.
- Alternative documentation is allowed
- Credit requirements are less strict
- Flexible terms like interest-only payments
- Higher debt-to-income ratios are allowed
- Purchase, refinance, and cash-out options
- And more!
Reasons to Choose Smart Series:
Non-QMs aren’t offered by all lenders. Contrary to popular belief, non-QMs aren’t always associated with high risk. To ensure homebuyers, refinance borrowers, and investors are set up for long-term financial success, we’ve been building a process from application to closing that makes the journey as seamless and smooth as possible for you.
We have seasoned non-QM underwriters who are trained specifically to review and approve Smart Series loans, experienced operations teams working behind the scenes to keep your loan on the fast track to the closing table, non-QM certified loan officers who are certified to recommend loan options specific to your needs, and user-friendly systems and technology to support documentation uploads as needed every step of the way.
Another reason Smart Series has been working for a growing number of borrowers is because the product line is ever evolving. As borrower needs shift, we do all we can to meet them.
Smart Series is opening the door for so many more buyers to achieve their homeownership dreams. When you’re ready to explore the financing solutions that make the most sense for you, we’re here to help!
