Non-Conforming Loans: A Complete Guide
Becoming a real estate investor comes with a lot of planning – from figuring out how much you can afford to choosing the right loan type. Oftentimes, when prospective property owners are determining the loan type they want to pursue, they automatically rule out non-conforming loans.
Despite the name, non-conforming loans might give you stronger purchasing power, come with more favorable terms, and result in a quicker turnaround time for fast-moving properties.
Let’s analyze the basics of non-conforming loans, how they work, and the pros and cons, to provide you all of the information needed to determine if this is the right method for your next investment property purchase.
What is a Non-Conforming Loan?
Non-conforming loans are those that don’t meet the criteria of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These loans typically lend above the loan limit and offer flexibility in loan terms that don’t meet Fannie Mae and Freddie Mac’s criteria. Common non-conforming loan types include:
- Jumbo Loans – These are loans that exceed the conforming loan limit set by Fannie Mae and Freddie Mac. Due to the high amount, these loans have strict criteria.
- Hard Money Loans – These are short-term loans that use the home being purchased as collateral. Hard money loans are commonly used when there is equity tied up in an existing home or the property is expected to sell quickly.
- Purchase-Money Loans – This loan type occurs when the seller issues a loan to the property buyer.
- Interest-Only Loans – This loan type requires buyers to pay only the interest portion on the loan for a defined period.
Non-conforming loans typically work like any other real estate loan, with pre-defined terms, repayment periods, and interest rates. The specifics depend on the lender you work with.
Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained in this message is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. (the “Manager”). Any and all information herein is deemed reliable but is not guaranteed.
What are the Pros and Cons of Non-Conforming Loans?
Non-conforming loans come with pros and cons that should be considered. First, non-conforming loans offer you more flexibility, such as lower credit score requirements, smaller down payments, larger loan amounts, and access to more property types. This can make it beneficial if you are trying to finance a unique property that is outside the scope of traditional lenders.
However, loan requirements can differ by lender, so it can be difficult to know your terms and rates are typically higher than through a traditional financer. Working with the right lender ensures you receive the most favorable terms for your purchase.
Are you interested in a non-conforming loan? Whether you have equity tied up in an existing property or are looking to close quickly on a new investment property, it’s important that you work with the right team. At Wilshire Quinn Capital, we can help you close on your real estate transaction by obtaining a hard money loan that does not have the strict underwriting requirements of a traditional lending institution. Reach out to a team member today to learn more or go over your loan scenario.
- Funding typically in 5-7 business days
Loan Amounts from $200,000 to $20,000,000
Interest Rates from 7.5% to 11%
Loan Term: 3 – 24 months
Commercial & Residential (non-owner occupied) Real Estate
- Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
Foreign National Loans Available
About Wilshire Quinn
Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.
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