Non-QM Loans
Flexible mortgage solutions for borrowers who don’t fit the traditional mold — self-employed, investors, bank statement income, and more.
Just because your income is unconventional doesn’t mean your mortgage has to be.
What Is a Non-QM Loan?
Non-QM (Non-Qualified Mortgage) loans are mortgage products that don’t conform to the strict guidelines set by the Consumer Financial Protection Bureau for “Qualified Mortgages.” They’re designed for borrowers whose financial situations are legitimate and strong but don’t fit neatly into conventional underwriting boxes.
Non-QM doesn’t mean subprime — these are quality loans for quality borrowers. They simply use alternative documentation and underwriting methods to verify income and creditworthiness. Think of them as the mortgage industry’s recognition that not everyone earns money the same way.
Who Is This Best For?
Non-QM loans serve a wide range of borrowers including self-employed professionals, business owners, real estate investors, retirees using assets for income, and anyone whose tax returns don’t reflect their true earning power. If you’ve been turned down for a conventional loan despite having the means to make payments, Non-QM might be the answer.
Common Non-QM programs include bank statement loans (12-24 months of deposits), asset depletion loans, DSCR (Debt Service Coverage Ratio) loans for investors, interest-only options, and recent credit event programs.
Common Non-QM Programs
- Bank statement loans: Use 12-24 months of bank deposits instead of tax returns to prove income
- DSCR loans: Qualify based on property rental income rather than personal income — ideal for investors
- Asset depletion: Use investment accounts, retirement funds, or other assets to qualify
- Interest-only: Lower monthly payments with interest-only periods
- Recent credit event: Programs available 1 day out of bankruptcy, foreclosure, or short sale
- Foreign national: Options for non-U.S. citizens without Social Security numbers
Non-QM loans typically require higher down payments (10-25%) and carry slightly higher rates than conventional loans. But for borrowers who can’t qualify through traditional channels, they open doors that would otherwise remain closed.
Key Advantages of Non-QM Loans
Alternative Income Documentation
No tax returns required for most programs. Use bank statements, asset statements, or property cash flow to document your ability to repay. Finally, a loan that matches how you actually earn money.
Investor-Friendly Programs
DSCR loans let you qualify based on the property’s rental income, not your personal income. Buy multiple investment properties without the conventional limit restrictions.
Recent Credit Events Welcome
Had a bankruptcy, foreclosure, or short sale? Some Non-QM programs allow financing as soon as 1 day after the event — no waiting period. Get back into homeownership faster.
Flexible Loan Structures
Interest-only periods, 40-year terms, adjustable rates, and customized amortization schedules. Non-QM products are built to fit your financial strategy, not the other way around.
Common Questions About Non-QM Loans
Are Non-QM loans the same as subprime?
No. Non-QM loans are not subprime. They serve creditworthy borrowers who simply have non-traditional income documentation. Many Non-QM borrowers have excellent credit and significant assets — they just don’t fit the conventional underwriting mold because of how they earn their income.
What rates can I expect with Non-QM?
Non-QM rates are typically 0.5-2% higher than conventional rates, depending on the program, your credit score, and down payment. While not the lowest rates available, they provide access to financing that wouldn’t otherwise be possible through traditional channels.
How much do I need to put down?
Down payment requirements vary by program. Bank statement loans typically require 10-20% down. DSCR loans for investment properties usually need 20-25%. Some programs may allow less with compensating factors like higher credit scores or significant reserves.
Can I use Non-QM for investment properties?
Yes — and it’s one of the most popular uses. DSCR (Debt Service Coverage Ratio) loans qualify you based on the rental income the property generates. If the rent covers the mortgage payment, you can qualify regardless of your personal income or employment situation.
Let’s Find the Right Non-QM Solution
No pressure. No obligation. Just clarity.
Most people start with a quick call — it makes everything easier.
Garry McDonald | NMLS #1922072 | DRE# 01781703 | (949) 534-6686