Non-conforming loans more popular

Non-conforming housing loans are increasingly being sought as an alternative to mainstream home loans, particularly by self-employed people.

Lenders offering non-conforming loans do not require the borrower to supply proof of income, such as tax returns and financial statements. They simply sign a declaration of income so the lender can assess the application. Key features of these loans are that they can be gained by going direct to a financial institution; many lenders allow up to 80 per cent of the property value to be borrowed; total amount that can be borrowed has increased, in some cases to $750,000; the functionality of a traditional home loan can be obtained, even line-of-equity loans.

While there's a negative feature of such loans – higher interest rates – most lenders allow the borrower to revert to a standard home loan once their repayment stability has been established and more conventional proof of income provided.