Unitl the Corona virus hit the US, lenders have been relaxing their standards for non-qm loan.
QM stands for qualified mortgage. A qualified mortgage is your ‘boring’ home loan, term of 30 years or less, no pre-payment penalties, no interest only, or any other ‘creative’ features and the borrower qualifies based on full documentation.
Which means that non-qm loans either have at least one ‘creative’ feature or the borrower does not show full documentation for their income.
It also means that these loans are meant for self-employed people only.
Lately, that is since March 20, some lenders that offer both qm and non-qm loans have decided to stop offering the non-qm ones. Some have even gone so far as to stop funding loans that they had cleared to close.
When you have fewer providers, you tend to end up with more expensive options and, some times, with more headaches.
However, proper research into lenders, would help reduce that.
Lenders that have changed their qm-related practices have not mentioned when they’ll go back to the usual way. I expect it’s not going to be a couple of weeks, though.