In the years since the housing fallout, it has become difficult to get a home loan due to oversight and regulation on lending banks by government programs and organizations. This has brought new light to an old option- non-bank lending. This option has been around for years, but recent studies show that this lending outlet is now taking over the mortgage lending world. Currently, 48 percent of mortgage lending comes from non-bank lenders. The reason for this switch of lending power is that non-bank lenders aren’t regulated the same way as banks. While typically these lenders carry a higher interest rate and require insurance on the loan, they are not required to follow the strict borrower guidelines that federally funded banks must follow.

These non-bank lenders could be a good option for your clients that are looking to enter the homeowner or single-family rental world but may have less than perfect credit. Typical issues that borrowers have when dealing with banks are discrepancies like bankruptcy, previous foreclosures or repossession, debt to income ratio of over three percent, low income, or even late payments. Banks require a basic credit score of 720 to currently buy a home, which is completely out of reach for many buyers. Non-banks can use their own discretion in these areas because they are not government regulated establishments, so the rate of approval on borrowers with blemishes is much higher.

Recently introduced programs by top lending banks are combating nontraditional lending by working with Fannie Mae and Freddie Mac’s buying standards to offer better deals to more of the population.

Wells Fargo’s mortgage program yourFirst Mortgage requires a credit score of 620 and considers tuition, rent, and utility bill payments. While this program requires mortgage insurance, it also requires a minimal three percent down.

JPMorgan Chase offers a similar program with a requirement of a minimum credit score of 680 and mortgage insurance.

Bank of America’s Affordable Loan Solution and CitiBank’s HomeRun Mortgage offer programs for low-income buyers that offer a three percent down payment. These loans have maximum income requirements, a credit score of 680, and loan limitations.

Quicken Loans has a similar program, but only requires one percent down. However, this program has multiple requirements such as a 680 credit score, income that is less than the median income for the county, debt to income level of 45 percent or less, and a mortgage insurance policy.

With more lending options and fewer limitations, more of your clients stand to be approved for a mortgage loan if you know the outlets to consider. The most important factor is getting an honest credit history from your client in the beginning, and presenting options that the buyer will likely be approved with. Thinking outside the box when it comes to mortgage lending could have more positive results for both you and your client.