These programs are ‘Non-QM, Bank Statement and Debt Service Coverage Ratio Loans (DSCR). But there are other important ‘niche’ type programs that serve other sectors of the real estate finance industry. Most mortgage loans issued today fall into the QM category. Verify your mortgage eligibility (Nov 5th, 2022)īack in 2014, the Federal Housing Finance Agency, or FHFA, set guidelines for what is now known as ‘Qualified Mortgage,’ or ‘QM.’ When a mortgage loan meets the guidelines for a QM loan, the lender is then able to be shielded from any lawsuits from borrowers as well as to set standards that would help prevent a repeat of the subprime mortgage crisis that hit the country. Lenders ask for the most recent paycheck stubs covering a 30 day period, the last two years of W2 forms, the last two years of tax returns from the self-employed borrower as well as bank statements to verify there are enough assets to cover the down payment, closing costs and cash reserves. If a loan program asks the housing debt ratio to be 30, that means the total housing payment should be at 30% of the applicant’s gross monthly income. They primarily do so to calculate debt-to-income ratios. Lenders want to make sure the potential borrowers can comfortably afford the new mortgage payment (including taxes, insurance and mortgage insurance when needed). Most everyone who has gotten or currently have a mortgage, are familiar with the standard documentation process as it relates to the applicant.
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