Non-QM Loans
Financing options for borrowers whose income or financial situation falls outside standard documentation requirements.
What Is a Non-QM Loan?
A Non-QM (Non-Qualified Mortgage) loan is a mortgage that does not meet the Consumer Financial Protection Bureau's (CFPB) definition of a "Qualified Mortgage." Qualified Mortgage rules were established to define a standard set of underwriting guidelines — Non-QM loans fall outside those guidelines but are still legal and available through certain lenders.
Non-QM loans are not government-backed and are not sold to Fannie Mae or Freddie Mac. They are originated and held by private lenders or sold to private investors. Because they operate outside standard guidelines, they often offer more flexibility in how income is documented and how eligibility is assessed.
Who Might Explore Non-QM Options?
Non-QM programs are designed for borrowers whose situations don't fit neatly into conventional or government-backed loan requirements. This may include:
- Self-employed borrowers whose tax returns may not fully reflect their income
- Business owners with complex income structures
- Real estate investors financing rental properties
- Borrowers with recent credit events who may not yet qualify for conventional financing
- High-net-worth individuals with significant assets but irregular income
- Foreign nationals purchasing U.S. property
Types of Non-QM Programs
Non-QM is a broad category that includes several different program types. Here is a general overview of some common structures — availability and specific terms vary by lender:
Bank Statement Loans
Instead of tax returns, these programs use personal or business bank statements to document income. Often used by self-employed borrowers whose tax returns reflect deductions that reduce their reported income below what they actually earn.
Asset-Based / Asset Depletion Loans
Income is calculated based on the borrower's liquid assets rather than employment income. A portion of the assets is divided over a period of time to establish a monthly income figure. May be used by retirees or high-net-worth individuals.
DSCR (Debt Service Coverage Ratio) Loans
Designed for real estate investors, DSCR loans qualify the borrower based on the rental income of the property rather than personal income. The ratio of rental income to the loan's debt service is the primary qualification metric.
Important Notes
Non-QM loans are not government-backed and are subject to individual lender guidelines. These programs may not be available in all areas. Terms, rates, and availability vary significantly by lender and program. This page is for informational purposes only and does not constitute a commitment to lend or an offer of credit. All loans subject to credit approval and underwriting review.
Have a non-traditional income situation?
Let's talk through your situation. Non-QM programs may offer options that standard loan types don't — and a conversation is the best way to find out.