Agency guidelines leave prospective homeowners on the sidelines

“Today’s average American home buyer is young, educated and becoming increasingly more diverse.” – Zillow

There’s little doubt that the U.S. borrower base is rapidly changing and becoming more diverse. That diversity includes millennials, self-employed, investors, foreign nationals, and those with imperfect credit.

Yet, despite some loosening, conventional lending guidelines have failed to keep pace with borrower needs. As a result, lenders offering responsible non-QM lending programs have an opportunity to reach creditworthy borrowers who simply don’t fit traditional lending guidelines.

For example, millennials have been the largest group of U.S. homebuyers for the past five years, according to the National Association of Realtors.1 Millennials held a market share of 36% over the past year, up from 34% in 2017. 

And although demand from younger borrowers is high, their credit scores are not. Even as average U.S. credit scores are reaching record highs, younger borrowers may still face homebuying challenges due to lower FICO scores:2

Age Average Credit Score
18-29 659
30-39 677
40-49 690
50-59 713

 

Another pronounced shift in the borrower base is the rise of self-employed.  The number of Americans working for themselves could increase by more than 7 percent in the next several years, bringing the total population of self-employed professionals to 10.3 million by 2026, according to the US Department of Labor.3

A range of innovative loan programs for today’s borrowers

Responsible non-QM programs can help millions of creditworthy borrowers who don’t fit the traditional credit box – and help lenders replace loan volume due to the decline in refinances. To meet the demands of today’s increasingly diverse borrower base, Verus Mortgage Capital’s extensive programs include:

  • Loans for borrowers with imperfect credit from $2 million to $5 million, starting at $100,000, through the Credit Ascent program.
  • Higher-balance loans offered with alternative documentation for self-employed individuals from $3 million to $5 million, starting at $150,000 through the Prime Ascent program. Prime Ascent interest-only loan LTVs increased from 80% to 85 percent.
  • Investor Solution Full Documentation, Self Employed and Foreign National programs, from $2 million to $5 million, starting at $75,000.

If you’re feeling the squeeze of rising rates, lower revenues and compressed margins, it’s time to learn how non-QM can help expand your business.

Get in touch with one of our highly qualified experts to learn more.

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  1. NAR 2018 Home Buyer and Seller Generational Trends study https://www.nar.realtor/sites/default/files/documents/2018-home-buyers-and-sellers-generational-trends-03-14-2018.pdf
  2. http://www.chicagotribune.com/business/ct-biz-american-credit-scores-record-high-20180924-story.html#
  3. https://www.bls.gov/careeroutlook/2018/article/self-employment.htm

NOTE: Zillow estimates place the millennial home purchase share as high as 42% in 2017. 2

https://wp.zillowstatic.com/31/ZG_CHTR_2017_FINAL-53c1e5.pdf

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