Mortgage Navigator • Non-QM Underwriting
Non-QM Reserves
Reserve requirements are a major place where one investor's rule gets mistaken for a universal Non-QM standard.
What drives reserves
Loan amount, LTV, occupancy, property count, credit profile, documentation type and program can affect required reserves.
What counts
Cash, securities and retirement funds may receive different treatment. Funds used for down payment or closing generally cannot simultaneously remain untouched post-closing reserves.
Investor matrix, not a universal Non-QM rule. Bank-statement calculations, expense factors, DSCR formulas, asset haircuts, credit-event seasoning, LTV, reserves and documentation can vary materially by investor and lender. MortgageDadOf3 separates the concept from the actual program matrix so a lender overlay is not mistaken for an industry-wide rule.
Consumer-purpose loans still require the applicable consumer-protection analysis. For covered transactions, Regulation Z’s Ability-to-Repay framework generally requires a reasonable, good-faith determination of repayment ability. Alternative documentation is not the same thing as “no documentation.”
Consumer-protection references
CFPB / Regulation Z §1026.43 Ability-to-Repay · CFPB Qualified Mortgage explanation · IRS IVES transcript information