Non-QM products like Bank Statement Loans and Debt Service Coverage Ratio (DSCR) Loans are rapidly gaining popularity among self-employed borrowers and real estate investors due to their flexibility and competitive rates. These alternatives offer solutions for those who struggle with traditional financing requirements, especially in the wake of rising loan-level price adjustments (LLPAs) applied to Fannie Mae loans.
Bank Statement Loans allow self-employed individuals to use bank statements (12-24 months) to verify income, bypassing the need for tax returns, which can be problematic for many freelancers and business owners. This solution has become an attractive option as more self-employed individuals seek simpler ways to qualify for financing.
DSCR Loans are particularly beneficial for real estate investors, as they are underwritten based on rental income generated by the property rather than the borrower’s personal income. With rising demand for investment properties, these loans are a great option for investors who wish to grow their portfolios without strict personal income verification.
What makes these non-QM products even more appealing is their competitive rates. Due to recent changes in LLPAs by Fannie Mae and Freddie Mac, borrowers with lower credit scores or higher risk factors are seeing increased costs on conventional loans. In contrast, Bank Statement and DSCR loans offer consistent, competitive rates that often outperform conventional options, making them a more viable choice for many borrowers.
As more people enter the self-employment and real estate investment sectors, non-QM loans like these are expected to play a larger role in property financing, offering an alternative that better suits the needs of today’s borrowers.
For more information on these products and how they can benefit your financing needs, contact your mortgage advisor today.
Tom Rydberg NMLS 221474
630-550-2656 Closefaster@gmail.com
Edge Home Finance Corporation Company NMLS #891464
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