EP.23 - Top 10 Loan Programs For NonQM

SEI Mortgage breaks down the top 10 Non-QM (non-qualified mortgage) loan programs available right now for self-employed borrowers, real estate investors, 1099 earners, and anyone who doesn't fit the traditional big-bank lending box.

If your tax returns don't tell the full story of your real income, this episode is for you. Learn how each program works, who it's built for, and how to use them to qualify based on what you actually earn, not what shows on your adjusted gross.

⏱ TIMESTAMPS

00:00 — Intro: What is a Non-QM loan and who is it for
00:46 — #10: Non-QM Interest-Only loans
01:30 — #9: Foreign National loans
02:16 — #8: Private Money loans
03:00 — #7: Fix and Flip / Hard Money loans
04:01 — #6: Asset Qualifier loans
04:46 — #5: Profit and Loss (P&L) loans
05:45 — #4: 1099 Income loans
07:15 — #2: DSCR (Debt Service Coverage Ratio) loans
09:00 — #1: Bank Statement loans
10:30 — Wrap-up + how to connect

📞 READY TO TALK?

Whether you're buying your first investment property, refinancing, or trying to figure out which Non-QM program fits your situation, we'd love to structure a scenario for you.

👉 Visit https://seimortgage.com (https://seimortgage.com/) to get started
📞 Call us direct at 1-800-401-1363
📩 Or reach out anytime to map out your next move

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#NonQM #MortgageTips #SelfEmployedLoans #DSCR #BankStatementLoan #RealEstateInvesting #1099Loan #FixAndFlip #AssetQualifier #SEIMortgage

Transcript

SPEAKER_00 0:00

Welcome back to the channel. If it's your first time joining us, please click that like and subscribe button. It keeps this little train going, and we really enjoy putting out all this content for you. So if you're not familiar with what non-QM products or non-qualified mortgages are, they are specifically designed and become very popular over the last few years for those of us who don't fit in those big bank lending boxes when you have to show your tax returns or your W-2s or your pay stubs or all of your supporting income documentation that was reported to the IRS and which ultimately leaves you with your qualifying income. And for a lot of us, that just doesn't fit into our financial picture. It's not showing us what our true income is. And the challenge with doing that is it does not show those of us who are self-employed or real estate investors what our true income is after looking at what your gross adjusted net is. So here's currently the top 10 loan products available for those of you who can utilize the non-QM space. Coming in at number 10 is the non-QM interest only loan product. This program is available on multiple non-QM loan products, which we'll cover as we get down to number one. But the essentials are this you can still utilize interest only payment options on a lot of different mortgage programs from 40-year amortized loans to 30-year amortized loans, where the first 10 years is an interest only payment, which is going to allow you to further reduce your monthly payment if you're trying to stabilize a property for rental income or you're trying to lower your monthly payments on your primary residence. It can be a great vehicle, whether you're using bank statement loans, PL loans, or DSCR loans in order to give you the most cost-effective payment savings on a monthly basis. Number nine, foreign national loans. Typically, if you don't file a tax return here, it's very difficult to purchase a property, or more importantly, you need 50 to 60% down payment. There are investor loans, meaning that you will buy this as an investment property versus a primary residence with as low as a 25% down payment, utilizing no tax returns whatsoever, and just the rent is what qualifies the mortgage. So essentially, whatever your full mortgage payment is, including taxes, insurance, and any applicable HOAs, divided by what your rent is, as long as that is a break-even number or better. Essentially, you have a loan if you meet the minimum program guidelines for credit score and sometimes reserve requirements. Number eight, private money loans. If you are recently just one day out of bankruptcy, foreclosure, short sale, typically it is very hard to get conventional or government financing. However, private money loans are still available if you have extremely low credit score. You have prior lates, recent lates, currently late payments. This program is going to allow you to access cash if you're trying to take those funds out of the property in order to consolidate debts or rehab a property, meaning fix it up if you're trying to get it market ready in order to sell that property so you can eliminate that existing debt and start working on a clean slate to further build your credit score to go back into conventional financing. Number seven, fix and flip or hard money loans. This is a fantastic program, also available to very first-time investors with no prior experience necessary. These loans will allow you to go as low as 10% down on an interest-only loan program in order to buy an investment property, fix it up, finance 100% of the rehab work, meaning whatever your current loan is plus the amount of work that you need to put into the property can all be financed. And ultimately, once you sell the property, you will then pay back that hard money loan and you're left with the remaining proceeds and you can redo it again. Or if you're planning on keeping that property and adding it to your portfolio, you could essentially use that hard money rehab loan to fix the property up, refinance it now at the new fair market value, take back out your initial principal investment, hold on to that property, go into a 30-year fixed DSCR loan, and repeat the process all over again. Coming in at number six is the asset qualifier loan. This loan is solely based on your assets and nothing else. So essentially, what that means is if you have checking, savings, money markets, retirement account, brokerage accounts, we will use a calculation in order to divide those assets out over a certain amount of months and essentially turn them into what it would be as a monthly income. The best part about that is you do not need to liquidate any of these assets. Wherever they're currently held, they will continue to stay there. If they're earning interest, they will continue to earn interest. But what it's essentially doing is using a formula to treat it like what it would be from monthly income when you're qualifying for that debt-to-income ratio in order to purchase that primary residence, second home, or even an investment property. Coming in at number five is the profit and loss loan. This is a fantastic non-QM product, which essentially is just its name. We are going to qualify your loan, whether you're buying a primary residence, second home, or rental property using just a profit and loss. This could come one of two ways: a fully audited profit and loss, meaning you're going to provide your profit and loss statement to your CPA or tax preparer, or they are going to prepare it. And essentially they're going to sign off on what your profit and loss is. And that number is what we're going to use as your qualifying income divided over 12 months. So we go as aggressive as a three-month profit and loss statement out to typically a 12-month profit and loss statement. But why this loan is so powerful is because if you have not filed your tax returns yet, you're on an extension, or more importantly, your reported taxable income is showing much less than what your profit and loss is, you have the ability to use the PL to generate your income to qualify for a property versus what your adjusted gross net is on your tax returns. Coming in at number four, the 1099 loan product, another fantastic non-QM product that just uses, guess what, your 1099 statement. So why this loan program is so powerful is because if you're in a type of industry where you do receive a 1099 income, more often than not, your gross adjusted net is often much lower than what that 1099 statement is that you were issued. Some of the great features of the 1099 loan product are we are going to use in most cases 100% of that 1099. We're only going to use the most recent one year, so we're not going to average your income over two years or ask you for two 1099 statements. We're going to generate it or derive it from one 1099. Also, if you have not filed your tax returns yet, typically in the conventional space, you can't use what your income is for the previous year until it has been filed with the IRS. So this loan product allows you to just use your 1099 document and no other documentation is required in order to generate the income that you need to meet the debt to income ratio requirements on all different types of properties, whether that's primary, secondary, investment property, single family, multifamily condo, townhome, pretty much everything in between. So if you just take a look at what the 1099 income is right now on your 1099, I'd be willing to bet if you took a glance at your most recent tax returns filed, it'd probably likely be closer to double of the qualifying income that we would use in order to qualify your potential purchase, cash out, refinance, or rate and term refinance, whatever transaction that you're looking to accomplish. Coming in at number two, the second most highly utilized loan product out there is the DSCR loan, which is the debt service coverage ratio loan. If you are a property investor or you are brand new looking to purchase property, this is a fantastic loan product that uses no tax returns, no other income documentation required whatsoever. Your property that you're looking to purchase is your income. So let's quickly break that down. If you're buying an investment property, whatever that proposed rent is going to be, whether you're using the 1007 rent comparables received from the completed appraisal or you already have existing tenants in place or you're going to get a new executed lease in place, we are going to use 100% of whatever that rent is. And if your payment for the mortgage, including principal interest, taxes, insurance, and any applicable HOAs is equal to that rent or less, you essentially have a loan product. This can be a 30-year fixed, an ARM, you can utilize that interest-only product that we talked about on number 10, or pretty much everything in between. But why that's so powerful is because you essentially do not need to have a job. You don't need to own a current property yourself. You could be presently renting a home and go out and become a real estate investor and buy your first investment property using a DSCR loan. In some instances, as low as 15% down payment. Typically, it's a 20% down. Again, you have the ability to utilize interest-only options or a standard 30-year fixed loan program in order to start or further build your loan portfolio. And one of the best features of this loan product is there's no limit on the amount of times you can use this loan product. So if you are a real estate investor, you're going to be tapped out at 10. Once you're in the conventional space, 10 is the max amount of loans that you can have on any given properties. And the DSCR loan currently has no limit on the number of times you can use that loan program. And finally, coming in at number one, the bank statement loan. Still the most highly utilized non-QM product currently available. This allows you to qualify simply using 12 or 24 months of your most recent consecutive bank statements. No tax returns, no other income documentation required. You can go as low as 10% down payment when purchasing a primary residence or 15% down payment when purchasing an investment property. And most importantly, it uses an expense factor to calculate what your proposed write-offs would be. Those expense factors range all the way as low as 10% up to 50% expense factor. So for example, if you had$100,000 in deposits in your bank account over 12 months using a 50% expense factor, that would give you$50,000 in annual income divided by$12 with as aggressive as$90,000 in income available using a 10% expense factor. This program still uses a debt to income ratio, but this will allow you to derive much more income than is typically reported on your tax returns. And in addition to that, and in addition to that, the bank statement loan does allow up to debt to income ratios of 55%. So there you have it. Hopefully this wasn't So there you have it, the top 10 non-QM programs. And if you are interested, so there you have it, the top 10. So there you have it, the top 10 non-QM programs currently available for those of you who are self-employed or just don't fit into the traditional lending boxes. If you think one of these programs may be a great fit for you, we'd love the opportunity to connect. Feel free to head over to SCimortgage.com where you can get in touch with us, and we'd love to structure a scenario for you on your next property. Thanks so much for watching, and remember to let your income work smarter, not harder. We'll see you on the next one.