What Are Non-Qualifying Vs No-Income Vs. Non-Conforming Mortgages
Question: What’s the difference between “non-qualifying” loans, “no income verification” mortgages, and “non-conforming” loans?
Answer: In general terms, the differences look like this:
“Non-qualifying” loans are typically older loans, perhaps FHA and VA from the 1980s, that you can assume without financial qualification.
“No-income” verification loans are mortgages where the lender does not check the income claimed on the loan application. These are so-called “stated income” loan applications. No income verification loans require less paperwork — something of value for the self-employed.
Warning: Do not overstate your income. Be aware that the income must be sufficient to qualify for the loan and that after the loan is approved the lender, or a secondary lender that buys the loan, may check the loan application against tax records as part of the auditing process. If income has been overstated serious problems can result.
“Conforming” loans typically require 20 percent down for owner-occupied properties, have 28/36 qualifying ratios, and are limited to a given loan amount. A “non-conforming” loan may allow less down, have different qualifying ratios and/or allow a larger loan amount.
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