Some non-traditional loans are targeted to borrowers with special circumstances that don't fit the cookie cutter guidelines of Conventional/Conforming mortgages. Most are called non-QM. Some examples:
- Investment properties where the reliance on repayment is based soley on the cash flow (rental income) of the property. Commonly called DSCR loans. No personal income or employment is required.
- Bank statement loans for self-employed borrowers where their tax returns don't adequately reflect their income. Income is derived soley from 12-24 months of bank statements showing the income.
- 1099 self-employed borrowers where tax returns are not required.
- Near miss are for borrowers who fall just outside of tranditional guidelines.
Bottom line, if you don't have a special situation, you wouldn't want them. Without going into the weeds, the guidelines are generally strict for these loan products. They fill specific niches and their rates also reflect it. Hope this helps!
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