You may view some of the most frequently asked questions and answers related to non-prime / non-qm loans. If you have any questions that are not listed here, you may call us or email us at firstname.lastname@example.org.
Q: What is the definition/meaning of a “non-prime mortgage”?
A: The definition of a non-prime mortgage loan is that it does not meet the requirements of a prime mortgage. There are strict rules set forth by the government regarding what loan features are allowed and also borrower qualifications. A non-prime mortgage is a loan that does not meet these requirements. A non-prime mortgage is essentially the same as a non-qualified mortgage.
Q: What credit scores are considered “prime” and “non-prime”?
A: There are some differences in the opinions of what exactly is considered “prime”. One thing is for certain, and that is that as soon as you dip below a 720 credit score, the interest rate will that you will be offered usually be higher. The lower the credit score, the higher the offered interest rate usually will be.
Q: What is the lowest credit score currently being accepted?
A: Some lenders are offering loans to borrowers with credit scores as low as 500. However, for this low of a credit score, a large down payment is required (at least 10-20% with most mortgage lenders).
Q: Are stated income mortgages available?
A: The types of stated income loans that do not require any documentation no longer exist. This vanished years ago after the subprime mortgage crisis. What exists now for stated income is different, and is more along the lines of alternative income documentation. Many mortgage lenders are allowing income to be verified by 24 months bank statements (personal, business, or a combination of both).
Q: Are FHA loans considered subprime?
A: Shortly after the subprime mortgage crisis, FHA loans stepped in to feel the gap for a lot of borrowers that were locked out from getting a mortgage. While FHA loans have never officially been considered subprime, they were the only option that most non-prime borrowers could qualify for. FHA loans allow credit scores into the 500s, but there is starting to be some backlash against lenders who are to loose in the FHA loans that they fund. FHA does not appear to be going away anytime soon, but other loan products are increasingly taking away business from FHA lenders.
Q: Can I get a home loan if I have had a foreclosure or bankruptcy?
A: While most types of mortgages will require you to be at least 2-3 years out of a bankruptcy or foreclosure, we have several lenders that will potentially finance a home loan for borrowers with a recent major credit issue. This includes options even just 1 day out of a bankruptcy, short sale, or foreclosure.
Q: What’s the difference between non-prime and subprime?
A: The non-prime loans of today differ from the reckless loan products that contributed to the subprime mortgage crisis. Many mortgage experts and commentators are suggesting that non-prime and subprime mortgages are the same, just with a subtle change to the official name. While non-prime mortgages are the closest thing to subprime mortgages that exist today, they differ in the sense that there are more stringent requirements and closer scrutiny of one’s ability to repay a mortgage. If you would like to, you can learn more about the differences of non-prime and subprime mortgages.
Q: What states do you offer non-prime mortgages in?
A: At this time, we have lenders that offer non-prime loan products in all 50 states.