Is a QM or Non-QM Mortgage the Best Option For Me?

[fa icon="calendar"] Oct 9, 2019 8:00:00 AM / by Eustis Mortgage

Eustis Mortgage



Before knowing the answer to this question, we have to first understand what a QM and Non-QM mortgage is. QM stands for “Qualified Mortgage.” Non-Qualified Mortgages are mortgage loans that do not fall into the Qualified Mortgage lending guidelines. Don’t let the name scare you away. Non-Qualified Mortgages have existed for several years and were created to service an underserved market of borrowers that don’t qualify for Qualified Mortgage. Alternative options such as Non-QM loans were simply put into play after the 2008 Mortgage and Credit Meltdown. QM Mortgage is when a lender has qualified a mortgage borrower’s ability to repay their mortgage loan, and Non-QM is perfect for borrowers who could not qualify previously for a mortgage due to the strict lending guidelines on government and conventional loans.


Benefits of Non-QM Loans:

  • No waiting period after bankruptcy and/or housing event
  • Asset Completion Loan Program
  • Bank statement loans for self-employed borrowers
  • Late payments in the past 12 months are not deal breakers
  • 95% LTV Jumbo Loans
  • 95% LTV Debt Consolidation Loans

Benefits of QM Loans:

  • Mortgage rates and fees are slightly lower
  • Can resell their loans on the secondary market to Fannie/Freddie
  • Normally sold to other secondary markets to private investors or held by the lender under their own portfolio
  • Insured by FHA, VA, USDA, Fannie, Freddie
  • Creates a layer of protection for lenders from liability from mortgage loans and borrowers
  • The Safe Harbor Act under Qualified Mortgage, offers protection against mortgage lenders against borrowers from lawsuits
  • Lenders are protected against borrowers who claim that they were extended home loans by lenders when they did not have the ability to repay their mortgage payments
  • Created and launched to protect both lenders and consumers against risky lending that created the mortgage and credit meltdown of 2008
  • Lenders who abide by QM Rules can package their loans and resell them in the secondary open market to Fannie and Freddie
  • Free up their warehouse lines of credit and originate and fund more mortgage loans
  • Minimize the origination and funding of loans that are considered risky
  • Void the chances of these loans going bad and into foreclosure
  • Avoid another mortgage meltdown like the one we had with the 2008 mortgage and real estate meltdown


Qualified Mortgage requires that the lender has qualified the borrowers:

  • Income
  • Liabilities
  • Monthly debt payments
  • This is done so the borrower does not take on more debt than to exceed 43% debt to income ratio of their pre-tax monthly income
  • Requires that borrowers not be charged more than 3% in total fees and points
  • Mandates that a lender does not issue riskier and/or overpriced mortgage loans

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Eustis Mortgage

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