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Non-QM Loans

Non-QM (Non-Qualified Mortgage) loans are designed for borrowers who may not meet the strict guidelines of traditional mortgages but are still financially capable of repaying a loan. These include self-employed individuals, real estate investors, or those with non-traditional income sources. Non-QM loans offer more flexible underwriting standards and alternative documentation options.

Unlike conventional loans that require W-2s and tax returns, Non-QM loans may accept bank statements, asset depletion, or rental income to verify the borrower's ability to repay. These loans do not follow the qualified mortgage guidelines set by the Consumer Financial Protection Bureau (CFPB), but they are still subject to federal lending standards.

Non-QM loans can be a great solution for unique financial situations, offering customized loan structures and terms. However, they often come with slightly higher interest rates or down payment requirements due to their increased risk profile.

A Non-QM loan is a type of mortgage that does not meet the qualified mortgage rules established by the CFPB. These loans allow for more flexible income verification methods and customized underwriting. Borrowers may qualify using bank statements, assets, or rental income rather than standard W-2s and tax returns.

Non-QM loans are ideal for borrowers who don’t qualify for conventional financing. Eligible individuals may include:

  • Self-Employed Professionals: Those without traditional pay stubs but can verify income through bank statements.
  • Real Estate Investors: Using rental income to qualify through DSCR (Debt Service Coverage Ratio) programs.
  • Foreign Nationals: Borrowers without a U.S. credit history but with strong financials.
  • Individuals with Credit Events: Recent bankruptcies, foreclosures, or short sales may be considered.
  • Retirees or High-Net-Worth Individuals: Qualifying based on assets instead of regular income.

  • Purchasing or refinancing primary residences, second homes, or investment properties
  • Financing for properties that don’t meet agency guidelines
  • Jumbo loans for high-value real estate transactions
  • Loans for foreign nationals buying U.S. property
  • Cash-out refinances for borrowers with unique income situations

  • Flexible Income Documentation: Qualify using alternative methods like bank statements or asset-based income.
  • Expanded Credit Guidelines: Recent credit issues may be acceptable.
  • Higher Loan Amounts: Great for high-value properties or jumbo financing.
  • Investment Property Options: Excellent for real estate investors and business owners.
  • Custom Loan Terms: Tailored repayment schedules, interest-only options, and more.

  1. Speak with a Loan Officer: Determine whether a Non-QM product fits your needs.
  2. Choose the Right Program: Bank statement loans, DSCR, interest-only, etc.
  3. Submit Financial Docs: Depending on the program, this may include bank statements, lease agreements, or asset records.
  4. Underwriting & Appraisal: Your lender will review your income and property to issue an approval.
  5. Close & Fund: Upon approval, sign your documents and complete funding.

  • Bank Statement Loans: Ideal for self-employed borrowers who can prove income through deposits rather than W-2s.
  • DSCR Loans: Debt Service Coverage Ratio loans for real estate investors based on rental income.
  • Asset-Based Loans: Use your liquid assets as a basis for loan qualification.
  • Interest-Only Loans: Lower initial payments by paying interest only for a set period.
  • Foreign National Loans: Mortgage solutions for non-U.S. residents investing in American real estate.

  • Higher Interest Rates: To offset increased lender risk, Non-QM loans may have slightly higher rates than conventional loans.
  • Larger Down Payments: Some programs require 10–30% down depending on risk factors.
  • Not Government-Backed: These loans aren't insured by FHA, VA, or other agencies.
  • Limited Availability: Not all lenders offer Non-QM products, so availability may vary.
  • Complex Guidelines: Programs and criteria vary widely between lenders, requiring careful review and comparison.