Non-QM Loans One Day Out of Foreclosure and Bankruptcy
In this article, we will cover qualifying for non-QM loans one day out of foreclosure and bankruptcy. We will discuss how you can now qualify for a home mortgage after a foreclosure, deed in lieu of foreclosure, and short sale with no waiting period requirements. However, the down payment requirements is higher than the traditional government and conventional loan programs.
Government and conventional loans require mandatory waiting period requirements after foreclosure and bankruptcy. The waiting period depends on the type of mortgage loan program. Re-established credit and no late payments after foreclosure and/or bankruptcy are a must. FHA, VA, USDA, and conventional loans all require a mandatory waiting period after foreclosure, a deed in lieu of foreclosure, a short sale, and bankruptcy.
What Is The Waiting Period For a Mortgage After Foreclosure?
The waiting period requirements depend anywhere between two years to seven years depending on the mortgage loan program.
So what happens if a person has recovered sooner than the waiting period and is able to afford a home but cannot due to the waiting period requirements?
Can I Qualify For Non-QM Loans One Day Out of Foreclosure?
Gustan Cho Associates now offers non-QM loans one day out of bankruptcy and foreclosure with no waiting period requirements. A 30% down payment is required. No late payments and re-established credit after foreclosure and/or bankruptcy are required.
The 30% down payment is substantial. However, as the foreclosure and bankruptcy ages, the down payment requirements get lower. For example, if the foreclosure is seasoned for at least one year, the down payment requirement is 20% versus 30%.
Down Payment Requirements on Non-QM Loans One Day Out of Foreclosure
The down payment requirement for non-QM loans one day out of foreclosure is a 30% down payment requirement which is pretty steep. The down payment requirement is less as the housing event and/or bankruptcy ages and the borrower’s credit score increases.
Non-QM loans are hands down the fastest-growing loan program in the nation. There are countless non-QM and alternative loans being launched every quarter. Many homebuyers who otherwise cannot qualify for a mortgage are not able to qualify for owner-occupant and investment home loans.
Eligibility Requirements on Non-QM Loans One-Day Out of Foreclosure and Bankruptcy
There is no waiting period requirements on non-QM loans after foreclosure, deed in lieu of foreclosure, short sale, and bankruptcy. Gustan Cho Associates now can offer a mortgage alternative program for those homebuyers who have just had a housing event.
What Are Housing Events in Mortgage Lending?
Housing events are foreclosure, deed in lieu of foreclosure, and short sale. We are an innovative real estate company founded with the mission to assist families who cannot qualify for a traditional mortgage.
Traditionally, there is a two-year waiting period after Chapter 7 Bankruptcy discharge to be eligible to apply for an FHA loan and 4 years to qualify for a Conventional loan. The waiting period is 3 years to qualify for an FHA loan after a foreclosure, deed in lieu of foreclosure, or short sale.
Fannie Mae Waiting Period Requirements After Foreclosure
The waiting period is 7 years to qualify for a conventional loan after foreclosure. The waiting period shortens to a four-year waiting period after a deed in lieu of foreclosure or a short sale. There are millions of potential homeowners who were victims of real estate and financial collapse.
They have since recovered those who are not eligible to purchase a home due to the federal waiting period mandatory requirements after a bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.
Benefits of Non-QM Loans
Now we offer No Waiting Period After Housing Event With Non-QM Loans. NON-QM Loans enable folks to actually get into the home of their dreams and enable them to purchase without any waiting period after the housing event.
Who Are Non-QM Mortgage Loans and How It Works
The homebuyer has no waiting period requirements after the housing event with non-QM loans. There is a one-year waiting period to qualify for non-QM loans after the Chapter 7 Bankruptcy discharge date.
There are minimum mortgage guidelines on all non-QM loans and bank statement loans for self-employed borrowers. Borrowers can qualify for one year of Chapter 13 bankruptcy discharge and one day after foreclosure and deed in lieu of foreclosure recorded date as well as one day after a short sale.
What Are Non-QM Loan Requirements
Borrowers need to meet the following mortgage guidelines on non-QM loans:
- to be employed
- have no late payments in the past 12 months
- minimum of a 640 credit score
- no greater than a 50% debt-to-income ratio ( 45% debt-to-income ratio is preferred )
- 3 months of cash reserves for principal, interest, taxes, and insurance
- have the necessary closing costs and down payment
Deferred student loans deferred for more than 12 months are exempt from debt-to-income ratio calculations on most non-QM loan programs.
Down Payment Requirements on Non-QM Loans
In general, NON-QM loans require more down payment than government and/or conventional loans. A 10% to 20% down payment is required on non-QM loans with 640 credit scores. 15% down payment with 660 credit scores. 10% down payment with 680 credit scores. A 5% down payment is required on conforming mortgage loans. 10% down payment on Jumbo Mortgage Loans up to $2 million.
Non-QM Mortgage Loan Process
Once borrowers are approved for NON-QM Loans, then they will be issued approval and can go and start shopping for a home. There is No Waiting Period After Housing Event with bank statement mortgage loans. Once buyers choose a home to their liking, they enter into a real estate purchase contract.
With an executed real estate purchase contract, buyers submit signed a contract to their loan officers. Once a contract has been accepted, the mortgage application goes through the full underwriting process. Non-QM Loans are becoming more and more popular due to no private insurance premium requirements.
Bank Statement Loans For Self-Employed Borrowers
Bank Statement Loans For Self-Employed Borrowers do not require any tax returns and are geared toward self-employed borrowers. There is No Waiting Period After Housing Event with our bank statement loan programs for self-employed borrowers. Lenders only require either 12 months or 24 months of borrowers’ bank statements. 12 or 24 months bank statements are averaged for the past 12 and/or 24 months and that average will be monthly income.
What Are Mortgage Lenders Looking For in Bank Statement Mortgages?
Borrowers can use personal and/or business bank statements. 100% of deposits are averaged on personal bank statements. 50% of deposits are averaged on business bank deposit deposits. The minimum credit score to qualify for bank statement loans for self-employed borrowers is 620.
A 20% down payment is required on a home purchase. Borrowers with credit scores over 720 can qualify for a 10% down payment home purchase. 680 credit scores require a 15% down payment. 50% maximum debt-to-income ratios.
Benefits of Non-QM Loans
Flexible Underwriting Criteria
- Non-QM loans provide more lenient underwriting guidelines, allowing borrowers with unique financial situations to qualify. This flexibility is particularly beneficial for self-employed individuals, those with irregular income, or those with significant assets but limited documented income.
Acceptance of Alternative Income Documentation
- Borrowers can use alternative forms of income verification, such as bank statements, profit and loss statements, or 1099 forms, instead of traditional pay stubs and W-2 forms. This is advantageous for self-employed individuals or those with non-traditional income sources.
Qualifying Despite Recent Credit Events
- Non-QM loans allow borrowers with recent credit issues, such as foreclosure, bankruptcy, or late payments, to qualify for a mortgage. This offers a pathway to homeownership for individuals who might need to meet the stringent credit requirements of conventional loans.
Higher Debt-to-Income (DTI) Ratios
- Non-QM loans often accept higher debt-to-income ratios compared to conventional loans. This means borrowers with substantial monthly obligations can still qualify, provided they can manage their debts responsibly.
No Waiting Period After Major Credit Events
- Unlike conventional loans, which may require a waiting period after foreclosure or bankruptcy, non-QM loans often do not have such restrictions. Borrowers can secure financing immediately after resolving major credit events, facilitating quicker homeownership.
Customizable Loan Terms
- Non-QM loans offer various customizable terms to suit individual borrower needs. Options may include interest-only payments, adjustable-rate mortgages (ARMs), and balloon payments, providing flexibility in managing monthly payments and overall loan structure.
Potential for Larger Loan Amounts
- These loans can accommodate higher loan amounts, making them suitable for borrowers looking to purchase high-value properties or those who need to finance significant investment properties.
Investors and Property Flippers Friendly
- Non-QM loans are often favored by real estate investors and property flippers who may not meet the income documentation requirements of traditional loans but have substantial assets and experience in real estate investment.
Accessible to Foreign Nationals
- Many non-QM lenders offer loan programs tailored for foreign nationals who may need a U.S. credit history but wish to invest in U.S. real estate.
Potential for Competitive Rates
- While non-QM loans typically have higher interest rates than conventional ones, they can still be competitive, especially for borrowers who may not otherwise qualify for mortgage financing. Shopping around can help secure favorable rates.
By leveraging these benefits, borrowers can access mortgage financing tailored to their specific financial circumstances, providing a viable alternative to conventional mortgage products.
Frequently Asked Questions (FAQs)
1. What are Non-QM Loans?
Non-QM loans are intended for borrowers who do not fulfill the standard criteria for conventional mortgages. These loans provide flexible underwriting guidelines and are often used by individuals with unique financial situations, such as recent foreclosure or bankruptcy.
2. Can I qualify for a Non-QM loan one day after foreclosure or bankruptcy?
Some lenders offer non-QM loans to borrowers just one day after a foreclosure or bankruptcy. These loans are intended to accommodate borrowers with recent credit events who are otherwise financially stable and capable of making mortgage payments.
3. What are the benefits of a non-QM loan?
The benefits of a Non-QM loan include:
*Flexible underwriting criteria
*Acceptance of alternative income documentation (e.g., bank statements)
*Ability to qualify with recent credit events, such as foreclosure or bankruptcy
*Customizable loan terms to suit individual financial situations
4. What are the typical requirements for a Non-QM loan one day out of foreclosure or bankruptcy?
Typical requirements for a Non-QM loan include:
*Proof of income: Alternative documentation such as bank or profit and loss statements may be accepted.
*Higher down payment: Lenders may need a larger down payment than conventional loans.
*Higher interest rates: Non-QM loans often come with higher interest amounts due to the increased risk to the lender.
*Credit history: While recent foreclosure or bankruptcy is accepted, lenders may still review your credit history and financial stability.
5. How do non-QM loans differ from conventional loans?
Non-QM loans differ from conventional loans in several ways:
*Flexible qualification criteria: Non-QM loans allow for more lenient income verification and credit history requirements.
*Acceptance of recent credit events: Borrowers can qualify despite recent foreclosure, bankruptcy, or other credit issues.
*Higher costs: Non-QM loans often have higher interest rates and larger down payment requirements.
6. What types of income documentation are accepted for non-QM loans?
For Non-QM loans, lenders may accept alternative forms of income documentation, such as:
*Bank statements (personal or business)
*Profit and loss statements
*1099 forms
*Asset depletion methods
7. Are there any risks associated with non-QM loans?
Non-QM loans come with certain risks, including:
*Higher interest rates and larger down payments which can increase the overall cost of the loan
*Less stringent qualification criteria, which may lead to higher default rates
*Potential for prepayment penalties or other fees
8. What should I consider before applying for a Non-QM loan one day out of foreclosure or bankruptcy?
Before applying for a Non-QM loan, consider the following:
*Assess your financial stability: Ensure you have a steady income and can comfortably afford the mortgage payments.
*Understand the terms: Be aware of the higher interest rates, down payment requirements, and any potential fees associated with the loan.
*Compare lenders: Explore and evaluate offers from various lenders to ensure the best terms for your situation.
9. How can I increase my chances of getting approved for a Non-QM loan?
To improve your chances of approval:
*Maintain a stable income: Provide thorough documentation of your income and employment stability.
*Save for a larger down payment: A high down payment can make you a more qualified borrower.
*Work on improving your credit: Even though non-QM loans are flexible, having a better credit score can help you secure better terms.
10. Are specific lenders specializing in non-QM loans for borrowers one day out of foreclosure or bankruptcy?
Some lenders specialize in non-QM loans for borrowers with recent credit events. It’s important to research and find lenders who have experience with these types of loans and can offer terms that suit your financial situation.
