Gone are the days when qualifying for a mortgage as a self-employed borrower was near impossible. If you’ve heard (or experienced) that being self-employed – whether you own a business, freelance, do contract work, or have multiple sources of income – makes it more difficult to qualify for a mortgage, know that you have options that don’t require you to jump through hoops to buy the home of your dreams! But how? (Spoiler: You don’t always need W-2s to qualify!)
What is a Non-Qualified Mortgage (Non-QM)?
Non-qualified mortgages (Non-QMs) are ideal financing solutions for borrowers who may not meet the qualifying criteria for traditional mortgages (or qualified mortgages). A qualified mortgage is a category of loans that have certain, more stable features that help make it more likely that you’ll be able to afford your loan. In comparison, non-QMs offer homebuyers (as well as homeowners looking to refinance, investors, or individuals with complex finances) access to financing solutions with less strict qualifying criteria.
Self-Employed Mortgage Loans are on the Rise
Self-employment has been on the rise for decades, now making up more than a quarter of Americans’ incomes. Nearly 30 percent of Americans are self-employed, which equates to more than 44 million people. From business owners and contractors to a growing gig economy, more borrowers are in need of mortgages built to work with their lifestyles, careers, and needs. Newrez has recognized a shift in borrower demand and built loan solutions to make homeownership more accessible for a variety of borrowers.
What is SmartSelf?
SmartSelf is a home loan within Smart Series, our full suite of non-QM loan options at Newrez.
SmartSelf is a non-qualified mortgage option that’s ideal loan for a self-employed borrower, or other business owners, who may not qualify for a mortgage using tax returns for income verification. It’s designed to make it easier for business owners or other self-employed borrowers to qualify for home financing so they can achieve their homeownership dreams!
The best part? Alternative income documentation to qualify for a mortgage!
How Does SmartSelf Work?
While traditional mortgages typically require W-2s and stricter income verification requirements, SmartSelf is built with a bit more flexibility. This financing solution allows you to qualify using bank statements, 1099s, or even assets with an asset evaluation. This way, more prospective homebuyers are able to secure home financing by proving they’re a reliable borrower with their unique finances.
Benefits of Non-QM Mortgages – SmartSelf
SmartSelf is dynamic solution tailor-made to work with self-employed borrowers – whether the goal is to purchase your first home, next home, or cash out! Rounded up below is a list of some (but not all!) SmartSelf highlights and benefits:
Qualify Using Bank Statements, 1099s, or Assets
With more lenient ways to qualify (compared to other loan products), more homebuyers qualify for home loans, now more than ever before.
Higher Debt-to-Income Ratios (DTI) Allowed
Compared to traditional, stricter jumbo loans, SmartSelf makes qualifying for a jumbo-sized loan easier for borrowers who have a higher debt-to-income ratio (DTI). While most lenders require a DTI less than 43%, SmartSelf allows a higher percentage.
Cash-Out Options Available
While some borrowers are looking to buy, some are looking for cash-out options, too. Reasons Customers Cash Out:
- Reinvest the money into projects that increase their home’s value.
- Put money towards a down payment on an investment property.
- Grow their investment portfolio.
Jumbo-Sized Loans Available to First-Time Homebuyers
SmartSelf is a jumbo-sized loan designed with first-time homebuyers in mind. As a first-time homebuyer, SmartSelf allows you to borrow up to $1.5 million when other conditions and requirements are satisfied.
Lower Reserve Requirements
Compared to traditional jumbo loans, SmartSelf allows borrowers to borrow more while tying up less money in reserves (freeing up cash to spend or invest elsewhere). A win-win!
Does SmartSelf Make Sense For You?
At Newrez, we understand that not every borrower has the same financial profile or sources of income; that’s why it’s important to us to offer a wide range of products that make sense for more homebuyers. To learn more about other non-QM products available, check out details on our full suite of non-QMs, Smart Series.
