NON-QM LOANS

Non-QM loans, short for Non-Qualified Mortgage loans, are a category of mortgage loans that do not meet the criteria set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac for "Qualified Mortgages" (QM). These loans were introduced following the implementation of the Ability-to-Repay (ATR) rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established guidelines for mortgage lenders to ensure that borrowers have the ability to repay their loans.

Unlike QM loans, which adhere to strict underwriting standards regarding factors such as the borrower's income, credit history, and debt-to-income ratio, non-QM loans offer more flexibility in eligibility requirements. This flexibility allows borrowers who may not qualify for traditional QM loans to obtain financing for various reasons, such as self-employment income, complex financial situations, or unique property types.