Non Prime, or Non QM loans represent a relatively new loan product. These loans provide home ownership opportunities for those individuals with income or credit issues that may prevent qualification for a traditional bank / FHA / FNMA type loan.
This type of loan is still often called “Subprime,” but in reality bear no association to those programs and funding infrastructures of old.
A Non-prime loan allows an individual to easily convert a short term loan into a long term, 30-year fixed rate mortgage with a rate much lower than hard money, construction or “bridge” loans. Those loans are usually more focused on borrower issues, property condition, or the need for fast funding.
“Ability to repay” guidelines still require lenders to verify income and ability to pay, non-prime loans offer more flexibility in areas that would normally cause a bank decline.
For example, a self employed borrower who doesn’t receive a regular paycheck but has their income deposited into their checking account:
That scenario would get you a last minute rejection by an FHA or FNMA Lender. We can readily approve that loan under nonprime guidelines provided the overall scenario remains within guidelines.
Other situations where Non Prime loans may help include:
· Investor / borrower who has multiple mortgages in his or her name
· Non-US Citizen borrower
· Recent bankruptcy or foreclosures
· Credit scores under 640
· Unusual property issues ( ex: mixed use property, hauled water, deferred maintenance, etc.)
· Non-Warrantable Condos
· Multiple sources of income
· Recent business startup or job transfer
· Sourcing and seasoning of the down payment
You will see these types of loans referred to under a number of labels – but all refer to the same type of loan: Non prime, Non-Prime, Non-QM, Non QM, Non Qualified, Sub-Prime, Sub Prime, Alt-A