If you watched my episode called 5 things you need to qualify for a home loan, you might remember that I talked about having two years of solid INCOME being one of the major elements necessary to qualify.

For people who are self employed or have commission-based income, providing this income verification isn’t as straight-forward as it is with someone who has W-2s for the past two years at the ready.

First, some people have asked me,  “Why is proving my income even that important if I have great credit and have always paid my bills on time?”

Well, to be frank, banks want to see WHERE the money you’re using to pay your bills is coming from – why? Because...death and taxes – the only two things that are guaranteed, right? If you have a bunch of money in a mattress somewhere that you use to pay your bills, that’s great, but unless you can prove that it came from a legitimate source, lenders usually won’t approve you just based on your shining credit score.

However, there are some pretty cool programs out there called Non-QM mortgages that are specifically aimed at people whose income isn’t as “traditional” or “verifyable” as a W-2d employee.  For instance, some lenders will just look at your bank statements and be happy with that if they see steady deposits over a period of time. And before you shake your head and think, oh I’m sure there’s a catch – no, there’s really not. Really!

Okay, so what does non-QM even mean? QM is the abreiviation for “Qualified Mortgage” – and a “Qualified Mortgage” is one that fits into the lending criteria of traditional or conventional loans like the ones that adhere to the Fannie Mae/Freddie mac guidelines (and if you don’t know what those are, check out my channel, there’s an episode there that explains it). So, a NON-QM loan is one that has guidelines which sit outside of those “Qualified” ones.

Okay so if like me, you remember how these Non-QM loans got a pretty bad rap after the financial crisis in 2007 & 2008. That’s because some lenders were giving out loans that people simply couldn’t afford, causing them to go into foreclosure when the crisis hit its peak. The good news is that BECAUSE of the financial crisis, federal regulations have really tightened up in the mortgage industry, causing ALL lenders – including NON- QM lenders -  to be much more careful about who they lend to.

So tune in to find out what exactly Non-QM loans are all about and how to get one!