A Non-Traditional Mortgage from a CDFI like Quontic helps non-traditional and low-income borrowers, like small business owners and more, achieve homeownership.
If you are: an online seller, an artist, a taxi or rideshare driver, self-employed, a small business owner, or even just low-income—you’re a non-traditional income earner. For you and other folks who don’t fit into the “traditional income” box, it might not be easy to get a mortgage loan from most lenders. Strict lending requirements can make it complicated for very responsible, credit-worthy borrowers—people who are good with their finances, but might not have the right documentation—to complete the deal. That’s why Quontic created our Non-Traditional Mortgage.
We’re able to offer Non-Traditional Mortgages because Quontic is one of only 2% of banks in the country that has a rare designation known as a CDFI: a Community Development Financial Institution. Community development financial institutions (CDFIs) are private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream. Quontic’s mission, as a CDFI, is to serve the underbanked and underbanked communities. We’re serving them with our CDLs.
Quontic is an FDIC insured mortgage-centric bank. The leaders and executives of our company are mortgage people. So most often, our CDLs serve people looking to buy a home. We’re creating lending opportunities for these borrowers as well as opportunities for homeownership education, to make sure people have resources at their fingertips. We’re teaching people the importance and benefits of owning a home throughout the process of actually making it happen.
We’ve had borrowers who didn’t even know they were eligible to be a homeowner until they came to us. But just because somebody appears low-income on paper and is rejected by other banks, doesn’t mean they actually are. And our theory holds up because while we’re lending to borrowers with non-traditional income, we’re seeing incredibly low default rates, fewer than .5% in the last year.
So what does the Non-Traditional Mortgage look like in practice? The down payment on a CDL is usually a minimum of 20%, which is pretty reasonable. And if your credit score is as low as 660, you’re in good shape to qualify. The rate is, however, usually a little higher than it is on conventional loans given that we provide significant income documentation relief. If the current market rates are in the 3% range, you’ll be somewhere in the 5%+/- window. Right now, that’s still a historically-low rate.
We can determine the security of a Non-Traditional Mortgage by looking at how similar loans have performed historically. If you get any type of home loan, whether it be government insured or traditional, its performance is based on the ability to pay your mortgage. The national average of a traditional mortgage has a 3%+/- default rate right now. Compared to that, we at Quontic are way below the national average in terms of all the other lending products.
The CDL program has been tested by time; Our research tells us that we are giving loans to well-credited borrowers with significant resources. People we like to call “good buyers.”
The pandemic has especially affected many of these good buyers. Think about small business owners and those who are self-employed. Because of their sporadic income status during the pandemic, many have been disqualified from traditional loans they might have been able to qualify for pre-pandemic. In New York, we saw it happening in our own backyard when businesses had to remain closed for long stretches of time. But the good news is that it’s opened up possibilities for us to step in and help these business owners who are now having problems finding a home loan due to the fact that they had a decline in income in 2020.
We once had a client named Mike. He and his father are taxi/rideshare drivers. They tried to get a loan for their first home purchase in Brooklyn. This is typically a 2-3 month process. The local lender they were working with left their loan stuck in review for 7 months. Their realtor found out about us and reached out for help. So, we spoke to them over the phone that weekend. The realtor explained the situation, and we were able to match them to the Non-Traditional Mortgage program and streamline the documentation process for them. We met immediately, and we were able to get them a loan closed very quickly, and get them into their first home.
That’s what we do. We can get you a loan and get you the house of your dreams—not just the house you can afford on paper.
If you’re interested in learning more about our Non-Traditional Mortgage, or any of our other adaptive loan products reach out to us. To get started, visit: https://www.quontic.com/ and click on “Pre-Qualify Now” or “Speak to a Mortgage Specialist.”