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Non-QM

To understand a Non-QM loan, you need to understand what a QM loan is! QM stands for Qualified Mortgage which is a term for a mortgage created in 2014 for mortgages that fall into pre-determined requirements outlined for consumer protection in the Dodd-Frank Act.  Non-QM loans are simply loans that do not fall into that set of requirements.

For a loan to be considered a QM loan it needs to meet the following criteria:

Certain Risky Loan features are not permitted.

Examples include:

    • Interest Only
    • Negative amortization loans
    • Balloon Payments
    • Loan terms great than a 30-year repayment
Limited Price for the loan

The annual percentage rate (APR) on a QM loan cannot be higher than a particular threshold.

No Excess Upfront Fees

Qualified Mortgages have limits on what your lender can charge. Limits depend on the size of the loan. If the fees exceed the limit, the loan cannot be considered a Qualified Mortgage.

Verified Income, Assets, and Debts

The lender must review and verify your current monthly income and assets against your monthly debt obligation to consider your ability to repay. If your monthly obligation exceeds the debt-to-income ratio, the loan may not be eligible for the qualified mortgage.