When we had the last big mortgage meltdown, the feds said mortgage lenders can no longer lend on just a credit score and use income without verification of that income. These were known as stated income loans.
All mortgage loans that fall under conventional, FHA and VA mortgages must now have income verified, either with W2s or full tax returns for the self-employed; these are called Qualified Mortgages.
Non-qualified mortgages (Non-QMs) are a hybrid of full doc loans and stated income loans. They are called Bank Statement loans. For the self-employed where the tax returns just won’t support their income, bank statement loans can use the business and personal bank statements to prove cash flow, and lenders can now use these bank statement to verify income thus fulfilling the rule of verifying income. These Non–QM loans have helped many self-employed borrowers purchase or refinance their homes.
Non-QM loans are still considered a risky loan so they carry a much higher interest rate that those of conventional mortgages. Indigo Mortgage does have access to the Non-QM bank statement loans so if borrowers are in need of this loan program, give us a call and we can do an evaluation for you.