has been reduced.
Non-QM Loans (Non-Qualified Mortgage) A Non-QM loan is any home loan that does not meet the strict standards set by the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) rules. These rules were created after the 2008 financial crisis to protect borrowers from risky lending practices. According to the International Journal of Research While QM loans require strict documentation of income, employment, and ability to repay, Non-QM loans provide flexibility for borrowers who can demonstrate financial stability in alternative ways. 1. Alternative Income Verification Instead of W-2s or tax returns, lenders may consider bank statements, asset depletion, rental income, or business revenue. 2. Higher Debt-to-Income (DTI) Ratios Allowed Traditional loans usually cap DTI around 43%. Non- QM loans may allow 50% or higher, giving more room for borrowers with existing debt. 3. Credit Flexibility Borrowers with recent credit events such as foreclosures, bankruptcies, or late payments may still qualify. 4. Customized Underwriting Decisions are made on a case-by-case basis, rather than rigid rules. Non-QM loans are ideal for: • Self-Employed Borrowers: Entrepreneurs, freelancers, and small business owners whose tax returns don’t reflect their true income. • Real Estate Investors: Those who qualify based on rental property cash flow rather than personal income. • Retirees: Individuals with substantial assets but limited
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