Non-Qualified Loans: For Those Who Don’t Meet the CriteriaĪ non-qualified mortgage is any mortgage loan that does not meet one or more of the guidelines for a qualified mortgage. A QM is also backed by government agencies like FHA, VA, and Frannie Mae. You have the assurance that the loan is designed to help you succeed in paying the mortgage, and it affords the lender some legal protections. You cannot be charged upfront fees above a certain threshold.Ī QM loan offers both you and the lender certain protections.Your debt-to-income (DTI) ratio will be strongly factored to ensure you can afford the loan payments.You will not be offered risky mortgage options like balloon payments and interest-only periods.You will not be offered a mortgage over 30 years in length.The lender ensures you have a strong ability to pay-you have a steady and predictable income, an excellent credit score, low monthly expenses, and low credit usage.Qualified Mortgage Loans: For Those With Strong FinancesĪ qualified mortgage loan follows very strict guidelines as outlined in the Dodd-Frank Act, which was enacted in 2010 to protect consumers following the 2008 financial crisis. Here’s some information to help you understand the difference and what it means for you.
Are you ready to buy a home but worry that you won’t qualify for a mortgage? There are options for every prospective homebuyer and you may have heard the terms “QM loan” and “non-QM loan” as you get started.
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