The David Greene Show: "Mortgage Monday - Non QM Loans" Summary

Release Date: June 16, 2025
Episode Title: Mortgage Monday - Non QM Loans
Host: David Greene
Guest: Christian Boucharder

Introduction to Non QM Loans

In this episode of Real Talk Real Estate, hosts David Greene and Christian Boucharder delve into the intricate world of non-Qualified Mortgage (Non QM) loans. Tailored for listeners interested in alternative financing options beyond traditional government-insured loans, the discussion aims to educate homeowners, investors, and real estate enthusiasts about diverse mortgage solutions that can cater to unique financial situations.

Understanding DSCR Loans

What is a DSCR Loan?
David introduces the Debt Service Coverage Ratio (DSCR) loan, commonly referred to as the "cash flow loan." This type of loan assesses the property's ability to generate sufficient income to cover its debt obligations, rather than relying solely on the borrower's personal income.

Key Insights:

• Qualified Applications: DSCR loans are ideal for properties like long-term rentals, short-term rentals, midterm rentals, pad splits, and even specialized facilities like sober living homes or assisted living care facilities.

• Commercial Extension: Christian highlights the adaptability of DSCR loans to larger properties, including multi-unit complexes ranging from 14 to 28 units, showcasing the loan's scalability from residential to commercial real estate.

Notable Quote:
"A debt service coverage ratio is something that typically was used in commercial real estate... It's based on the property's performance, making sure that it generates enough money to pay for its expenses." — David Greene [04:09]

Commercial Loans Explained

David and Christian differentiate between residential commercial loans and true commercial loans based on the number of units and property type.

Residential Commercial Loans:

• Unit Range: 5 to 10 units, such as a six-unit apartment complex or multiple triplexes on a single lot.
• Ideal For: Investors focusing on small-scale residential complexes.

True Commercial Loans:

• Unit Range: Above 10 units, extending to large-scale investments like 1,400-unit apartment complexes.
• Considerations: Requires substantial investor experience due to the scale and complexity of underwriting for high-stakes acquisitions.

Notable Quote:
"When you get above 10 units, you get into true commercial. You're completely out of the DSCR realm at that point." — Christian Boucharder [06:02]

Ideal Borrowers for DSCR Loans

Christian outlines the perfect candidates for DSCR loans, emphasizing that these loans are best suited for seasoned investors who have expanded beyond conventional lending avenues.

Characteristics of Ideal Borrowers:

• Experienced Investors: Those with multiple income streams and a robust portfolio of rental properties.
• Business Owners: Entrepreneurs who may have complex income structures not easily deciphered through traditional tax returns.
• Outgrowing Conventional Loans: Investors who have exhausted conventional financing options and seek more flexible terms.

Notable Quote:
"If you can qualify for a conventional loan, you should stay in that realm. But the DSCR loan is great for the person in that scenario." — Christian Boucharder [07:21]

Bridge Loans: Bridging Financial Gaps

Bridge loans serve as short-term financing solutions to bridge the gap between the purchase of a new property and the sale of an existing one.

Types of Bridge Loans:

1. True Bridge Loans (Buy Before You Sell):

   • Use Case: Acquiring a new primary residence before selling the current one by leveraging its equity.
   • Operation: Utilizes the equity in the existing home to finance the new purchase, with plans to sell the old property post-move.

2. General Bridge Financing:

   • Use Case: Short-term needs such as property renovations, competitive market acquisitions, or rapid closings.
   • Strategy: Acquire the property quickly and refinance into long-term financing like conventional or DSCR loans.

Benefits:

• Financing Renovations: Enables immediate funding for property improvements.
• Quick Closings: Facilitates swift acquisition without extensive underwriting.

Notable Quote:
"Being able to finance renovation is number one. And quick closing, it's number two." — Christian Boucharder [10:30]

Home Equity Line of Credit (HELOC)

HELOCs are second-position loans that allow homeowners to tap into their property’s equity without disturbing their primary mortgage.

Key Features:

• Flexibility: Can be used for home remodels, upgrades, or as additional down payment for new purchases.
• Fusion Product: Combines a first mortgage with a HELOC to optimize financing terms and reduce monthly debt obligations.

Ideal Candidates:

• Homeowners with Equity: Individuals looking to leverage their existing home value for additional financing.
• Simultaneous Financing Needs: Borrowers interested in obtaining both a primary loan and a HELOC simultaneously for better terms.

Notable Quote:
"These can also be used in our Fusion product where we get you a simultaneous first position loan and a HELOC." — Christian Boucharder [13:17]

Fusion Loans: Optimizing Mortgage Structures

Fusion loans combine a primary mortgage with secondary financing (HELOC or HELO) to provide borrowers with advantageous terms.

Advantages:

• Lower Interest Rates: By splitting the loan, borrowers can benefit from better rates on the primary mortgage.
• Avoiding PMI: Reduces the need for Private Mortgage Insurance by optimizing down payments across both loans.

Use Case Example:

• Scenario: Purchasing a $1 million home with a 70% first mortgage ($700,000) and a 20% HELOC ($200,000), resulting in substantial savings on interest rates and eliminating PMI.

Notable Quote:
"For the right scenarios, it can actually lead to very significant savings for the right borrowers." — Christian Boucharder [14:54]

Bank Statement Loans for Business Owners

Designed specifically for entrepreneurs and business owners who may not have substantial taxable income but demonstrate consistent cash flow through bank statements.

How It Works:

• Income Verification: Utilizes 12 to 24 months of business bank statements to assess income, bypassing traditional tax return dependencies.
• Ideal Borrowers: Contractors, freelancers, and other self-employed individuals who have significant business-related expenses that reduce taxable income.

Key Benefits:

• Primary Residence Financing: Enables business owners to secure financing for their primary homes without relying on rental income, which is exclusive to DSCR loans.
• Business-Friendly: Recognizes the unique financial structures of entrepreneurs, allowing for more accurate income assessment.

Notable Quote:
"I almost call the bank statement loan the business owner loan. It's such a great opportunity for business owners to buy primary residences." — Christian Boucharder [17:04]

Foreign National Loans: Financing for Non-US Citizens

Catering to non-US citizens interested in purchasing real estate in the United States, these loans come with specific requirements and higher interest rates.

Eligibility Criteria:

• Credit Assessment: Utilizes credit scores from the borrower’s home country or alternative financial documentation such as trade lines (e.g., mortgage, car loans).
• Down Payments: Often require larger down payments compared to loans for US citizens.
• Documentation: Proof of financial credibility through consistent payments and existing debt obligations.

Current Landscape:

• Regulatory Environment: Despite political shifts and potential future regulatory changes, current programs facilitate foreign investment in US real estate.
• Loan Products: Exclusively available options that enable non-US citizens to invest in American properties.

Notable Quote:
"If you got a family member that's not a US Citizen or maybe they have their green card or a temporary identification number, they can buy real estate. There's absolutely loan products for them." — Christian Boucharder [18:06]

Conventional Loans: A Brief Mention

While the focus of the episode is on non-QM loans, David and Christian acknowledge the prevalence and importance of conventional loans for standard home purchases. They emphasize their expertise in conventional financing, reassuring listeners that acquiring a regular mortgage is streamlined when utilizing their services.

Conclusion and Contact Information

David and Christian encourage listeners interested in exploring non-QM loan options or conventional financing to reach out through their websites and social media platforms.

• Christian Boucharder:

  • Website: theonebrokerage.com
  • Instagram: @the1broker

• David Greene:

  • Website: davidgreen24.com
  • Instagram: @davidgreen24

They invite listeners to leave comments, share the podcast with real estate professionals, and subscribe for future episodes.

Notable Quote:
"We only covered a small non, non conventional portion here today... More about our company and these loan products is on our website." — Christian Boucharder [20:28]

Key Takeaways

• Diverse Financing Options: Non QM loans like DSCR, bridge, HELOC, Fusion, bank statement, and foreign national loans provide flexible solutions tailored to various financial situations and investment strategies.

• Expert Guidance: Leveraging expertise from seasoned professionals like David and Christian can help borrowers navigate complex mortgage landscapes and identify the best-fit loan products.

• Accessibility: These alternative financing methods democratize real estate investment, making it accessible to business owners, experienced investors, and non-US citizens who might otherwise face challenges with conventional loans.

For more detailed information and personalized consultations, listeners are encouraged to visit the hosts' respective websites and social media profiles.