Home buying begins like any other purchase. Even before you start house hunting, you need to know how you’ll be paying, and how much you can afford. Enter the loan process, the process of getting pre-approved by a reputable mortgage banker. During this process, you’ll find out if you qualify for a loan, and how much of a home you can actually afford.
The “if” in that last sentence is the word that frightens most home buyers. Unfortunately, many lenders deal mainly in conforming loans. Conforming loans are loans that meet the specific guidelines set forth by Fannie Mae and Freddie Mac. From the size of the loan, to the borrower’s debt-to-income ratio, the variables must all conform with these often unrelenting rules. For that reason, some borrowers will find that they don’t qualify.
What is a “non-conforming loan?”
A non-conforming loan is a loan that does not meet the specific criteria for a conforming loan. In general, real estate loans are considered non-conforming when the borrower’s financial status or the property type doesn’t meet standard guidelines.
Examples of situations where a non-conforming loan is a good option are:
- If you have a poor credit rating (usually 620 or below)
- If you have undocumented income
- If you have a high amount of debt
- If you’ve had a recent bankruptcy
- If you have a high debt-to-income ration (If your monthly mortgage , insurance, taxes, and other consumer debt payments add up to more than 45% of your monthly pre-tax income, you may not qualify for a conforming loan.)
Just like conforming loans, not all non-conforming loans are created equally. Here at Blackstone, we are a direct lender. That means that we have more flexibility, allowing more creativity when it comes to providing a loan that works with your unique financial situation. Not to mention our ability to get you approved faster with usually less fees.
Have you been told that you don’t qualify for a loan because of one of the examples above? Call us here at Blackstone. We can truly explore every possibility and option, and will work hard to find a loan that works for you!