Sometimes, not conforming to the norms can be beneficial. Non-conforming loans set themselves apart from conventional loans in several ways. These loans are often backed by the government and include those offered by the Veterans Administration (VA), the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), and others. Read on to find out if this type of loan is a good fit for you as you begin the home-buying process.

Credit Standards

Most loans require a certain credit score, even those that are aimed at those with credit issues. However, have you heard of a loan with no credit score requirements? Non-conforming loans may not use credit scores, but they determine creditworthiness in other ways. For example, they may give weight to cash in the bank, assets, proven income, employment stability, and more rather than a credit score. Lenders offering these loans work closely with borrowers to educate them on good credit practices. Many borrowers must complete a course of education before they can apply for this type of loan.

Income Verification

You should be able to prove that you have income coming in, but you don't necessarily need to have regular income as verified by a tax return. Instead, the borrower's complete financial picture is evaluated in terms of being able to pay back the mortgage. For example, a non-conforming loan underwriting might accept a profit and loss statement in lieu of a tax return to show income flow.

Non-Traditional Terms

You don't have to stick to the usual 15 or 30-year terms with this type of loan. These loans are customized to fit the borrower's needs rather than a set term to pay the loan back.

Non-Traditional Housing

This type of loan also covers those interested in financing housing that falls outside the usual single-family residential choices. Fractional ownership (timeshares), non-warranted condo projects, assisted living quarters, and more may be covered under these loans.

Down Payment Issues

It's no surprise that this type of loan also has more flexible requirements for a down payment. You can often get approved for a non-conforming loan with no down payment needed at all.

What to Know About Non-Conforming Loans

Overall, this type of loan can provide those who don't fit the usual guidelines a chance to own a home. However, you should know that these loans do come with their own sets of guidelines and rules that must be followed, especially government-backed loans. In certain cases, borrowers must pay higher interest rates for a non-conforming loan as well.

Speak to a company such as Secure One Capital to find out more.