Nurse buys investment with non-qualified loan

Loan officer: John Holmgren.

Property: Single-family home in Martinez. Purchase price: $740,000.

Loan amount: $389,000. Loan type: 5/1 Adjustable Rate Mortgage.

Rate: 5.75 percent with 1.5 points.

Backstory: My client, a nurse who owns a home in Livermore, wanted to buy a Bay Area home for her daughter to live in.

She was well-qualified from an income standpoint and was planning to make a substantial down payment to keep the monthly payments low, but she had a recent bankruptcy that prevented her from qualifying for conventional Fannie Mae loans.

Because the property she was buying would be an investment property, she was also not able to use Federal Housing Administration financing.

A qualified mortgage means government-mandated lending criteria needs to be followed by mortgage agencies and most commercial banks. Non-QM loans have emerged since the mortgage credit crisis as attractive alternatives to “hard money” private lending sources, which usually charge high rates and fees.

The concept behind these loans, for most consumers, is that they will enable the purchase of a property and then, after the passage of a few years, the home buyers should be in a position to refinance to a conventional loan when their situations have normalized.

The buyer’s agent, Susan Niami of Golden Gate Sothebys International Realty, found the perfect home near downtown Martinez. Our client was successful because of her large down payment and our ability to close quickly: despite the non-standard nature of the loan product, we closed in 18 days.