Qualified (QM) & Non-Qualified (non-QM) Residential Programs

🏦 1. Conventional Mortgage Products
Definition:
Conventional mortgages are not insured or guaranteed by the federal government. They typically conform to underwriting standards set by Fannie Mae and Freddie Mac.

🔹 A. Conforming Loans
Meet Fannie Mae/Freddie Mac guidelines (loan limits, credit score, DTI ratios). Often require private mortgage insurance (PMI) if the borrower puts down less than 20%. Lower interest rates for qualified borrowers.

🔹 B. Non-Conforming Loans
Loans that do not meet conforming guidelines. Most common: Jumbo loans (exceed conforming loan limits).

Other examples: Loans for non-warrantable condos, unusual income situations, or credit-challenged borrowers.

🔹 C. Portfolio Loans
Held on the lender’s balance sheet (not sold to secondary markets). More flexible underwriting but typically higher rates.

🏛️ 2. Non-Conventional (Government-Backed) Mortgage Products
Definition: These loans are insured, guaranteed, or funded by a government agency, offering easier access for specific groups of borrowers.

🔸 A. FHA Loans (Federal Housing Administration)
Low down payment (as low as 3.5%). More flexible credit standards. Mandatory mortgage insurance premium (MIP) regardless of down payment.

🔸 B. VA Loans (Department of Veterans Affairs)
For eligible veterans, service members, and spouses. No down payment or mortgage insurance required.

Backed by the VA, with favorable rates and flexible credit.

🔸 C. USDA Loans (U.S. Department of Agriculture)
For rural and some suburban homebuyers. No down payment. Income limits apply; intended for low- to moderate-income borrowers.

🧩 Other Specialized Products (Can Be Conventional or Non-Conventional)
Interest-Only Mortgages

Adjustable-Rate Mortgages (ARMs)

Balloon Mortgages

Reverse Mortgages (HECM – for seniors)

Bank Statement Loans (for self-employed borrowers)

Construction-to-Permanent Loans