Rate premium
The additional interest rate paid for a non-QM loan above the conventional baseline. The premium exists because non-QM loans cannot be sold to Fannie Mae or Freddie Mac — they are held in portfolio or sold to private investors, who price the documentation risk. Its size is not published by any regulator or agency and varies with program type, credit, LTV and market conditions; the 0.75–2% used illustratively across this site is an editorial estimate, not a quoted or sourced spread, and some lender-published figures run higher.
How does this affect your loan? Estimate self-employed qualifying income with the DTI calculator, or read the self-employed mortgage guide.
Related terms
- Prepayment penalty — A fee charged if you pay off the loan early — either through a full payoff (refinance or sale) or, on some pro…
- APR (Annual Percentage Rate) — The total cost of a loan including the interest rate, origination fees, discount points, and other lender char…
- Rate lock — A lender commitment to hold a specific interest rate for a set period (typically 30–60 days) while your loan i…
- Points / discount points — Upfront fees paid to the lender to buy down the interest rate. 1 point = 1% of the loan amount. On a $400,000…
- Origination fee — The lender’s fee for processing and underwriting the loan. Typically 0.5–1% on conventional loans; 1–2% on non…
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Sources
Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.