What sort of property can you buy in California with a non-QM loan?

If your credit history and income don’t quite meet the standard criteria for mortgage loan programs, you should consider applying for a non-QM loan. Non-qualified mortgage, non-QM for short, is a fantastic option for borrowers who aren’t qualified for traditional mortgages. Understanding how this type of loan works and what you can use it for will help you decide if this loan is perfect for you.

If you’re interested in applying for a non-QM loan, contact a non-QM lender in Santa Monica.

What are Non-QM Loans?

A non-QM loan is a mortgage that does not conform to the strict government or conventional mortgage guidelines. Non-QM loans are designed for borrowers who can’t qualify for traditional mortgages. 

Self-employed home buyers, real estate investors, foreign nationals, and individuals with a poor credit history may struggle to qualify for conventional loans. This is where a non-QM loan comes in handy. Non-QM loans open up real estate investment opportunities for a particular group of borrowers.

If you want to know more about California real estate investing, call our loan officers for more info.

Pros of Non-QM Mortgages

Borrowers find non-QM mortgages attractive for the following reasons:

  • Flexible terms: Compared to traditional loans, you can get extended loan terms exceeding thirty years, negative amortization, and interest-only payments with this type of mortgage.

  • Lenient credit requirements: One of the key benefits of non-QM mortgages is that borrowers with a rocky credit history have a chance to make their homeownership dream a reality.

  • Require less documentation: Non-QM lenders have flexible documentation requirements, unlike traditional mortgages. They don’t require W-2s, income verification, or tax returns. In some cases, lenders don’t look for your income verification. Instead, they may request alternative documentation, such as profit and loss statements.

Who Benefits from Non-QM Mortgages?

Non-QM mortgages benefit individuals who want to purchase a property but aren’t qualified for traditional mortgages. Non-QM loans have lenient credit requirements and flexible terms, and they require less documentation, making them a perfect option for:

Borrowers with unpredictable incomes

Individuals who are self-employed or work on commission may struggle to qualify for traditional mortgages because they require tax documents to prove their self-employed income.

Foreign Nationals

A foreign national is an individual that’s not a U.S citizen. Non-QM mortgages for non-US citizens may not require proof of U.S. income, Social Security number, or credit history.

People with a high DTI or Real Estate Investors

Borrowers with many outstanding mortgages but still have steady income may need to take out a non-QM loan.

What Type of Properties can I buy with a Non-QM Loan?

For real estate investors, you can use a non-QM to expand your portfolio and purchase 2 to 4-unit properties, condominiums, townhomes, stand-alone homes, multi-use, and multi-family 5 to 20-unit properties.

Are Non-QM Loans safe?

Non-QM loans are safe. Lenders must evaluate if you’re capable of paying off the loan, but they may accept alternative documents as proof. 

The Bottom Line

Getting a non-QM mortgage is a fantastic option for individuals who can’t secure a qualified mortgage due to rocky credit history or high DTI. Lenders still have criteria for people who apply for non-QM loans, and they’ll evaluate the borrower’s ability to repay the loan, but their requirements are more lenient.

If you’re interested in starting a real estate business, you can begin your journey by applying for a non-QM loan with Nuline Funding. Get in touch with our mortgage experts for assistance.


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.