Chapter 1
Federal Mortgage Laws and Consumer Protection Regulations
Course: Safe Mlo Prep
Subject: Safe Mlo Prep
Chapter: General Mortgage Knowledge
OVERVIEW
Non-QM loans do not meet the specific criteria for Qualified Mortgage status. They serve borrowers who cannot qualify under QM standards — typically because of non-traditional income documentation, high DTI, or product features like interest-only payments. Understanding what makes a loan Non-QM and who these products serve is tested on the NMLS exam.
- What Makes a Loan Non-QM
A loan is Non-QM when it fails to meet any one of the QM requirements:
- Contains interest-only payments
- Contains negative amortisation
- Contains a balloon payment — outside small creditor exception
- Loan term exceeds 30 years
- Points and fees exceed the QM cap (3% for loans ≥ $100,000)
- Does not meet the General QM pricing threshold
- Common Non-QM Loan Types
Bank Statement Loans: