Question 1

What credit score do I need to qualify?

Accepted Answer

We accept credit scores as low as 580 for NON-QM loans. Your score affects your interest rate and down payment requirement: 580-619 typically requires 25-30% down, 620-679 requires 20-25% down, and 680+ qualifies for better rates with 15-20% down. We focus on your overall credit profile, not just the score.

Question 2

Can I get a mortgage after bankruptcy?

Accepted Answer

Yes. Chapter 7 bankruptcy requires 2 years post-discharge (vs 4 years for conventional). Chapter 13 bankruptcy can qualify after just 1 year into the repayment plan if you have court approval and on-time payments. You'll need to show re-established credit and stable income since the bankruptcy.

Question 3

How soon after foreclosure can I buy again?

Accepted Answer

NON-QM loans are available 2-3 years after foreclosure completion (vs 7 years for conventional). You'll need to demonstrate that the foreclosure was due to extenuating circumstances (job loss, medical emergency, divorce) and that you've re-established good credit since then. Larger down payments (25-30%) help offset the foreclosure history.

Question 4

What if I have collections or charge-offs?

Accepted Answer

Collections and charge-offs don't automatically disqualify you. We look at the overall pattern: Are they old or recent? Medical vs non-medical? Have you made payments since? You typically don't need to pay off collections before closing, though paying them can improve your approval odds and rate. We focus on your current payment behavior.

Question 5

Can I qualify with high debt-to-income ratio?

Accepted Answer

Yes. NON-QM loans accept DTI ratios up to 50% (some programs up to 55%). If your credit challenges are combined with high DTI, we can use bank statement income calculation or asset depletion to show ability to repay. Compensating factors like large down payment, significant reserves, or strong rental history help.

Question 6

Do I need to explain my credit issues?

Accepted Answer

Yes, a letter of explanation (LOX) is required for major credit events like bankruptcy, foreclosure, late mortgage payments, or significant derogatory marks. The letter should briefly explain what happened, what you've done to recover, and why it won't happen again. Honesty and taking responsibility strengthen your application.

Question 7

How much down payment do I need with bad credit?

Accepted Answer

Minimum down payment ranges from 15-30% depending on credit score and other factors. 580-619 score: 25-30% down. 620-659 score: 20-25% down. 660-679 score: 15-20% down. Larger down payments can offset lower credit scores and may qualify you for better interest rates.

Question 8

Will my interest rate be much higher?

Accepted Answer

Interest rates for credit-challenged borrowers are typically 1-3% higher than conventional rates, depending on credit score, down payment, and loan type. A 620 score with 25% down might be 2% higher than conventional. A 680 score with 20% down might be only 1% higher. Rates improve as you rebuild credit and can refinance later.

Question 9

Can I refinance to a better rate later?

Accepted Answer

Absolutely. Many borrowers use NON-QM loans as a stepping stone. After 12-24 months of on-time mortgage payments, improved credit score, and increased equity, you can refinance to a conventional loan with better rates. We help you create a roadmap to refinance and save money long-term.

Question 10

What documentation do I need?

Accepted Answer

Standard docs include: 2 years tax returns (or bank statements for self-employed), 2 months bank statements, pay stubs, credit report, bankruptcy discharge papers (if applicable), and letters of explanation for credit issues. We'll provide a detailed checklist based on your specific situation and work with you to gather everything needed.

Credit Event	Conventional Waiting Period	NON-QM Waiting Period	Details
Bankruptcy (Chapter 7)	4 years	2 years	NON-QM lenders accept 2 years post-discharge with re-established credit
Bankruptcy (Chapter 13)	2 years after discharge	1 year into repayment	Can qualify while still in Chapter 13 repayment plan
Foreclosure	7 years	2-3 years	NON-QM programs available 2-3 years post-foreclosure
Short Sale	4 years	2 years	Shorter waiting period if no deficiency judgment
Deed-in-Lieu	4 years	2 years	Similar to short sale treatment

Feature	Conventional Loan	NON-QM Loan
Minimum Credit Score	620 (varies by lender)	580 (some programs accept lower)
Bankruptcy Waiting Period	Chapter 7: 4 years, Chapter 13: 2 years	Chapter 7: 2 years, Chapter 13: 1 year
Foreclosure Waiting Period	7 years	2-3 years with extenuating circumstances
Collections/Charge-offs	Must be paid or disputed off report	Accepted, no payoff required in most cases
Late Payments	No 30-day lates in past 12 months	Recent lates accepted with explanation
Down Payment	3-20% (higher for lower scores)	15-30% (based on credit profile)
Interest Rate	Market rate (lower)	1-3% higher than conventional
Approval Focus	Strict credit score and history requirements	Holistic review, compensating factors considered

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Waiting Periods: Conventional vs NON-QM

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NON-QM Loans vs Conventional Mortgages for Credit Challenges

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