Non-Qualifying Loans

Every borrower’s financial situation is unique. That’s why here at Carrington, we offer Non-QM (Non-Qualified Mortgage) loans as an alternative to traditional mortgage options.

WHAT ARE NON-QUALIFYING MORTGAGES?

Non-QM loans are mortgage loans that do not meet the qualified mortgage standards set by government-sponsored entities like Fannie Mae and Freddie Mac or the Consumer Financial Protection Bureau (CFPB). These loans are designed to cater to borrowers who have non-traditional income sources, unique financial circumstances or credit histories that fall outside the guidelines of traditional mortgage loans.

Non-QM Benefits:

1. Flexible Qualification Criteria: Non-QM loans offer more flexibility in terms of qualification criteria. They consider various factors beyond traditional measures, such as credit score and debt-to-income ratio. This allows borrowers with non-traditional income sources, self-employed individuals or those with credit challenges to have a chance at homeownership.
2. Expanded Debt-to-Income Ratio: Non-QM loans typically have higher debt-to-income (DTI) ratio allowances compared to conventional loans. This means that borrowers with a higher level of debt relative to their income may still qualify for a mortgage.
3. Alternative Documentation: Non-QM loans may accept alternative forms of income documentation, such as bank statements, asset depletion, or stated income. This can be beneficial for self-employed individuals or those with fluctuating incomes.
4. Unique Property Types: Non-QM loans can accommodate unique property types, such as non-warrantable condos, mixed-use properties and properties with non-conforming features. This expands options for borrowers looking to finance properties that may not meet traditional loan requirements.
5. Investment and Second Home Financing: Non-QM loans can also be used for investment or second homes. This allows borrowers to take advantage of real estate investment opportunities or finance their vacation homes.

Many borrowers use these types of loans for the following reasons:

• 1099 employment rather than W-2 income.
• Lower credit scores.
• High debt-to-income ratio.
• Income fluctuates considerably over time.
• Financing an investment property.

It’s important to speak with your loan officer about your specific needs and wants to make sure you’re choosing the loan option that best fits your homeownership journey.

Our Carrington Loan Officers will help you navigate to the best product for your new journey home.

Eligibility for Non-QM Loans:

1. Credit History: Although Non-QM loans may have more lenient credit requirements, than conventional loans, lenders will still review your credit history to assess your creditworthiness. However, certain derogatory credit events in the recent past may not disqualify you from obtaining a Non-QM loan.
2. Income Documentation: Non-QM loans may accept alternative forms of income documentation, such as bank statements or asset depletion, making them suitable for self-employed individuals or borrowers with complex income structures.
3. Debt-to-Income Ratio: Evaluated by the lending professional to evaluate your debt-to-income ratio to determine if you have the capacity to repay the loan. Non-QM loans generally have more flexibility in DTI ratio allowances, allowing borrowers with higher levels of debt to still qualify.
4. Property Type: Non-QM loans have different requirements based on the specific program. Property condition and marketability will still be addressed during the loan process.

It’s important to note that Non-QM loans may have different requirements depending on the lender and specific loan program. Our experienced team can help you evaluate your eligibility and guide you through the application process.

Flexible Advantage Loan

An ideal solution for consumers with lower credit scores, high debt-to-income ratios, who are self-employed or need help documenting their income, or who have had a recent credit event - such as foreclosure, bankruptcy, short sale, missed credit card or late mortgage payments - and who may not be eligible for conventional or government loan products.

Flexible Advantage Plus Loan

If you have less than perfect credit and have a history of late payments but are now current, our Plus program offers may be suitable for you.

Carrington Prime Advantage Loan

A home financing solution for those with high credit scores who miss qualifying for a conventional, government, or jumbo loan. In addition, eligible borrowers may have credit events more than four years old. Offering competitive pricing and allowing for the use of alternative income documentation, Prime Advantage provides loans up to $3.5 million.

Adjustable-Rate Mortgages

Adjustable-Rate Mortgages are available for all our loan products listed below. A loan officer can help you decide if an ARM is right for you based on the loan that you choose and your specific needs.

The Carrington Flexible Advantage, a home loan product, is an ideal solution for consumers with lower credit scores, high debt-to-income ratios, who are self-employed or need help documenting their income or who have had a recent credit event - such as foreclosure, bankruptcy, short sale, missed credit card or late mortgage payments - and who may not be eligible for conventional or government loan products.

Highlights of the Carrington Flexible Advantage* loan for purchase or refinancing include:

Features*:

• Purchase, refinance, and cash-out loan programs are available.
• Credit scores down to 550.
• 15, 30 and 40-Year Terms are available.
• Loan amounts up to $1.5 million and cash-out loans up to $250,000.
• Recent credit events such as bankruptcy, short sale, foreclosure, and history of late payments are acceptable.
• Single-family homes, townhomes and condominiums are allowed.
• Bank statements are acceptable to verify income in place of IRS tax documents for self-employed borrowers.
• Cash-out refinance allows you to pay off higher interest rate loans, consolidate debt, pay for home improvements or college and possibly lower overall monthly payments.
• Fixed and adjustable-rate programs are available.
• No mortgage insurance is required.

*Carrington's Flexible Advantage, Advantage Plus, and Prime Advantage product requirements vary depending on the consumer’s credit grade, Loan-To-Value, Debt-To-Income, and FICO scores and may require reserves from 3 to 6 months. Ask your loan officer for additional details and requirements. NOTE: Not available in MA and ND. No cash-out is available in TX.

If you have less than perfect credit and have a history of late payments, but are now current, our Plus program offers may be suitable for you.

Features*:

• Bankruptcy and foreclosures acceptable (must be 36 months out).
• Loan amounts up to $2 million and cash-out up to $500,000.
• No mortgage insurance is required.
• Credit scores down to 620.
• Primary residences, townhomes, and condominiums are allowed.
• W-2s and bank statements are acceptable for self-employed borrowers.
• 15, 30 and 40-Year Terms are available.

*Carrington's Flexible Advantage, Advantage Plus and Prime Advantage product requirements vary depending on the consumer’s credit grade, Loan-To-Value, Debt-To-Income and FICO scores, and may require reserves from 3 to 6 months. Ask your loan officer for additional details and requirements. NOTE: Not available in MA and ND. No cash-out is available in TX.

Carrington Prime Advantage is a home financing solution for those with high credit scores who miss qualifying for a conventional, government or jumbo loan. In addition, it may have credit events more than four years old. Offering competitive pricing and allowing for the use of alternative income documentation, Prime Advantage provides loans up to $3.5 million.

Features*:

• Credit scores from 660.
• Purchase, refinance and cash-out loans are available.
• Single-family homes, townhouses and condos are allowed.
• 15, 30 and 40-Year Terms are available.
• Loan amounts up to $3.5 million and cash-out up to $750,000.
• Bank statements are acceptable to verify income in place of IRS tax documents for self-employed borrowers.
• First-time homebuyers welcome.
• Recent credit events such as bankruptcy, short sale, foreclosure and history of late payments are acceptable.
• Fixed, adjustable-rate and interest-only programs are available.
• No mortgage insurance.

Prime Advantage has additional advantages:

• Improved Pricing: Pricing is 125-150 basis points more favorable than CFA+
• Higher LTVs: 75%-90% Loan to Value available depending upon loan amounts (see the matrix for details)
• Maximum Cash-out: $1,000,000
• Debt Ratio: Standard 43% and expanded up to 50% (see guidelines for details)
• Occupancy: Primary residence and second homes
• Amortization Types: Fixed, ARM and Interest-only ARM options
• Loan Purpose: Purchase, Rate/Term Refinances, and Cash-Out Refinances
• Terms Available: 15, 30 and 40 Year Fixed, 5/1 ARM, 7/1 ARM, 10/1 ARM, 5/1 ARM-IO, 7/1 ARM-IO, and 10/1 ARM-IO
• Doc Types: Full Doc, 1-Year Alt Doc, 12 or 24-Month Bank Statements (Business or Personal) and Asset Depletion
• Rural Properties Eligible: 80% Max LTV

Not available in all states.

*Carrington's Flexible Advantage, Advantage Plus, and Prime Advantage product requirements vary depending on the consumer's credit grade, Loan-To-Value, Debt-To-Income, and FICO scores and may require reserves from 3 to 6 months. Ask your Loan Officer for additional details and requirements. NOTE: Not available in MA and ND. No cash-out available in TX.

When you buy a home with an Adjustable-Rate Mortgage (ARM), you will have a lower initial interest rate and payment for the initial term of the loan and the loan then adjusts for a set time for the remaining period.

This is great for borrowers who want to save money upfront. For example, a 5/1 ARM will have a lower fixed interest rate for the first five years of the loan; and the interest rate will adjust for a certain period after that. Unlike fixed-rate mortgages, adjustable-rate mortgages (ARM) offer interest rates typically lower than you’d get with a fixed-rate mortgage for a period, such as five or 10 years, rather than the life of the loan. But after that, your interest rates (and monthly payments) will adjust corresponding to current interest rates. if interest rates increase, so do your monthly payments. If they decrease, you’ll pay less on mortgage payments.

ARM loans are great for homebuyers with lower credit scores that are best suited for an adjustable-rate mortgage, and who can nudge those interest rates down enough to put homeownership within easier reach. These home loans are also outstanding for people who plan to move and sell their homes before their fixed-rate period is up, and their rates start vacillating. However, the monthly payment can fluctuate.

Purchasing Your First Home

Purchasing a first home is an exciting milestone in any person's life. The process can be intimidating. Here at Carrington, we do not want it to be. That is why we’re here to help educate and assist you along the way. If you need assistance, please get in touch with our Homeownership Concierge at any time.

How Much Can I Afford?

“What can I afford?” This is a common question. There are many factors that determine what a reasonable mortgage payment should be, including annual income, existing debt payments, and down payment (if any), as well as additional costs like homeowners’ insurance and property tax.

Carrington Mortgage Services provides a handy Mortgage Payment Calculator to help homebuyers find a monthly payment that’s comfortable for them.

Getting Preapproved

The first step toward securing your loan is getting preapproved. A pre-approval will assure a seller that you are prepared and have walked through the finer details with the mortgage professional vs a prequalification. The approval process is a comprehensive analysis to determine your credit ability. Preapproval

Should I use a Real Estate Agent?

When using an Non-QM Loan, finding a real estate agent with experience and knowledge of Non-QM loans is essential. With the Carrington family of companies, you have full access to a professional realtor through Vylla.

What is the difference between Qualified and Non-Qualified Mortgages?

A Non-QM loan uses alternative methods of income verification (instead of the standard income methods of verification of a QM loan) to help the borrower get approved for a mortgage loan. Non-QM loans are not guaranteed, or backed by FHA, VA, Fannie Mae, or Freddie Mac. A loan that meets QM requirements provides a safe harbor for lenders against lawsuits from borrowers who default on their loans.