Non-QM Loans Aren’t Subprime. Here’s What They Really Are.

In this episode of the Real Estate Update Podcast, host Paul Centopani speaks with Mike Pearson, Senior Vice President at AD Mortgage and newly named President of the Florida Association of Mortgage Professionals, about what non-QM loans really are and why they should not be confused with subprime lending. Mike explains how non-QM mortgages fall outside certain qualified-mortgage requirements and why borrowers may use them when their income or documentation does not fit neatly within conventional lending guidelines.The conversation also explores who typically uses non-QM financing and why the borrowers may be stronger than the name suggests. Mike says many non-QM borrowers have credit scores above 760, substantial down payments, and experience purchasing real estate. He discusses why self-employed borrowers and real estate investors are two of the largest groups using these loans, as well as how bank statements, profit-and-loss statements, and business cash flow can sometimes provide a more useful picture of income than traditional tax-return underwriting.Mike also breaks down the potential tradeoffs, including situations where non-QM rates may be higher than conventional financing and others where investment or second-home borrowers may find better pricing. He explains why non-QM is usually not the first choice for typical first-time homebuyers, but may still provide flexibility for borrowers who fall just outside standard guidelines. He closes by encouraging buyers to understand all of their available mortgage options and work with an experienced loan originator who can help determine which structure makes the most sense.Subscribe for more mortgage news, housing news, homebuyer tips, and real estate market updates.Comment below: Before this episode, did you associate non-QM mortgages with subprime lending?Connect with Mortgage Research Network:YouTube: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.youtube.com/@MortgageResearchNetwork⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.instagram.com/mortgageresearchnetwork/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.facebook.com/mtgresearchnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Website: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠MortgageResearch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect With Mike Pearson:LinkedIn: https://www.linkedin.com/in/mike-pearson-1880408/First Time Homebuyer Cheat Sheet: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://bit.ly/4w8CiVM⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Homebuyer Calculators: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://bit.ly/4n0hDPv⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect With a Lender: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://bit.ly/426Gyaw------0:00 – Intro1:11 – What Is a Non-QM Loan?2:32 – Why Non-QM Isn’t Subprime3:20 – Who Uses Non-QM Financing?5:18 – How Non-QM Loan Terms Differ6:01 – Are Non-QM Interest Rates Higher?6:33 – Why Non-QM Lending Is Growing7:35 – Who Should Consider a Non-QM Loan?8:07 – Advantages for Self-Employed Borrowers9:31 – Drawbacks of Non-QM Loans10:16 – Are Non-QM Loans Good for First-Time Buyers?11:31 – Advice for First-Time Homebuyers12:28 – Outro------#NonQMLoans #MortgageOptions #Homebuying