A non-qualified mortgage (non-QM) is a property loan that has been created to help borrowers designed to help borrowers who can't meet the strict criteria of a qualifying mortgage. So if you are self-employed or have credit blemishes or don’t qualify for a conventional or agency mortgage for some reason, then you can go for a Non QM mortgage loan instead.
The easiest way to figure out what a non-qualifying mortgage is, you need to understand the main criteria:
Income: You must have income that can be verified by strict guidelines with income history by way of pay stubs, W-2s, and tax returns.
Debt: Your debt-to-income ratio (DTI) must be less than a certain percentage threshold. This shows what portion of your income is going towards paying your debts.
Loan term: Usually these loans are 30 years or less.
Loans that don’t follow such strict guidelines are called Non QM Mortgage loans. Please note such loans are completely legal and above board and are reported by brokers and lenders to the government like qualifying loans.