A non-QM (non-qualified mortgage) home loan program is a type of mortgage that does not meet the standard guidelines set by the Consumer Financial Protection Bureau (CFPB) for Qualified Mortgages (QM). These guidelines were established to ensure that borrowers have the ability to repay their loans, with features like limits on debt-to-income ratios, restrictions on certain loan features, and requirements for verification of income and assets.
Non-QM loans are designed for borrowers who may not fit the traditional lending criteria but still have the financial capacity to repay a mortgage. This includes self-employed individuals with complex income structures, borrowers with recent credit issues (such as a bankruptcy or foreclosure), investors, and those needing more flexible income documentation methods. Non-QM loans often feature alternative income verification methods, such as bank statement loans or asset depletion loans, where lenders assess the borrower's ability to repay based on their bank deposits or liquid assets instead of traditional W-2 forms and tax returns.
Traditional loan programs may not serve businesses or individuals with non-standard incomes. Click on each loan program to view additional details, requirements, and key benefits.
40-Year Interest Only
Interest Only Loan programs provide solutions for borrowers looking to optimize their monthly payment obligations.
This program is set up so the borrower is only required to pay interest for a specific period of time, usually a few years. After this period, the loan typically converts to a conventional mortgage with principal and interest payments.
The unique 40-year option spreads the payments over a longer period, which reduces your monthly mortgage payment, but increases the total interest you'll pay over the life of the loan.
This loan program is a solution for high net-worth borrowers, individuals who are retired, or those with meaningful assets. This flexible program offers options to use your current assets for debt-to-income qualification.
If you’re ready to buy, we’re ready to partner with you. Reach out today to get started on your smarter mortgage plan!
Business Bank Statement
A Mortgage Made for Small Business Owners!
Being a small business owner comes with many perks and sometimes, a lot of paperwork. If you’re trying to find a simpler path to homeownership, try the Bank Statement Loan Program from Churchill Mortgage!
The Debt Service Coverage Ratio (DSCR) loan program makes financing investment properties easier than ever since you can qualify for a home loan based on each property's expected cash flow. With no limit on financed properties and a credit score requirement as low as 620, your next investment may be closer than you think.
Loan Perks:
FICO requirement as low as 620, and up to 80% LTV for scores of 700 and up
No tax returns or W-2s required to qualify
No property limit and a maximum loan amount of $6.25M under a blanket loan
5, 10, and 30-year terms for financing with interest-only available
This product is offered via a lender partner/broker channel. Subject to the terms and conditions of that lender, not Churchill Mortgage. Other restrictions or limitations may apply. Not all applicants will qualify. Not a commitment to lend. Terms and conditions can change without notice.
Non-Warrantable Condo
The non-warrantable condo program provides solutions to condo projects outside Fannie Mae and Freddie Mac guidelines.
These criteria often relate to the financial health, ownership structure, and occupancy rates of the condominium project. Condos that fail to meet these standards are considered "non-warrantable" and pose higher risks to lenders.
Common Characteristics of Non-Warranted Condos:
High Investor Ownership: A significant percentage of units are owned by investors rather than owner-occupants.
Commercial Space: The condo complex may have a high ratio of commercial space compared to residential space.
Financial Instability: The homeowners' association (HOA) may have financial issues, such as low reserve funds or pending litigation.
Occupancy Rates: A large number of units are vacant or used as short-term rentals.
Insurance Coverage: Insufficient or lapsed insurance coverage for the condo project.
Being self-employed comes with many perks and sometimes, a lot of paperwork. If you’re trying to find a simpler path to homeownership, try the Personal Bank Statement Loan Program from Churchill Mortgage!
Program Benefits:
12 & 24 Month Options
1099 income is permitted for independent contractors and those earning 100% commission
Offer greater flexibility for borrowers who may not fit traditional lending criteria
Feature alternative income verification methods than traditional programs.
Cons:
Higher fees and interest rates to reflect the increased lender risk
Requires more complex qualification documentation and process
May include features non allowed in QM loans, like interest-only payments or balloon payments.
(FAQ)
Frequently Asked Questions about Non-QM Loan Programs
Navigating the world of mortgages and home loan programs can feel overwhelming, but understanding the basics can make the process much smoother. To help you on your journey to homeownership, we've compiled a list of frequently asked questions about mortgages and home loan programs.
Whether you're a first-time home buyer or looking to refinance, these questions and answers are designed to provide you with the knowledge and confidence to make informed decisions about your home financing options.
What types of income verification are accepted for non-QM loans?
Non-QM loans offer alternative income verification methods to accommodate borrowers with non-traditional income sources. These include:
Bank Statement Loans: Lenders review 12 to 24 months of personal or business bank statements to assess income and cash flow.
Asset Depletion Loans: Borrowers can qualify based on their liquid assets, such as savings, investments, or retirement accounts, which are used to demonstrate their ability to repay the loan.
Profit and Loss (P&L) Statements: Self-employed borrowers can provide a year-to-date profit and loss statement prepared by an accountant or themselves to show their income.
Who benefits most from non-QM loan programs?
Non-QM loan programs are particularly beneficial for:
Self-Employed Individuals: Borrowers with complex income structures who cannot provide traditional W-2 forms and tax returns.
Real Estate Investors: Those who may have high net worth and substantial assets but inconsistent monthly income.
Borrowers with Recent Credit Issues: Individuals with recent bankruptcies, foreclosures, or other credit challenges that disqualify them from conventional loans.
High Net Worth Individuals: Borrowers who can demonstrate financial stability through significant assets rather than traditional income.
Foreign Nationals: Individuals without established U.S. credit who need alternative ways to verify their ability to repay.
What are the main differences between non-QM and QM loans?
The main differences between non-QM and QM loans include:
Income Verification: Non-QM loans accept alternative forms of income verification, while QM loans require standard documentation like W-2s and tax returns.
Credit Requirements: Non-QM loans may accept borrowers with lower credit scores or recent credit issues, whereas QM loans have stricter credit standards.
Loan Features: Non-QM loans can include features such as interest-only payments, balloon payments, and longer loan terms that are not allowed in QM loans.
Interest Rates and Fees: Non-QM loans typically have higher interest rates and fees to compensate for the increased risk taken by lenders.
Are non-QM loans safe?
Non-QM loans are designed to be safe and provide options for borrowers who don't fit traditional criteria but still have the capacity to repay. However, they often come with higher interest rates and fees, and may include riskier features like interest-only payments.
Borrowers should carefully evaluate their financial situation and work with their home loan specialist to ensure they choose a loan that fits their needs and repayment ability.
More Guides to Home Loan Programs
Explore more guides to other loan program types. If these programs don't fit your needs, look into our other guides to the other types of loan programs. To learn more about loan programs in general, you can view our Expert Guide to Home Loan Programs.
Other restrictions or limitations may apply. Not all applicants will qualify. Not a commitment to lend. Terms and conditions can change without notice.
We strive to provide comprehensive information about our home loan programs; however, it is important for users to understand that not all programs are available at all times or in all locations. Each loan program may have specific prerequisites or requirements that must be met in order to qualify or become eligible.
While we make every effort to ensure the accuracy and currency of the information on our website, we cannot guarantee that a particular loan program will be available when you apply. Additionally, meeting the listed criteria does not guarantee qualification for any program.
Please note that availability and eligibility for our home loan programs are subject to change without notice. We recommend contacting us directly to verify the current status and specific requirements of any program you are interested in before making any decisions based on the information provided on our website. Our team is here to help you navigate your options and find the best loan program to meet your needs.
