Non-QM

A Non-QM (Non-Qualified Mortgage) loan is a type of mortgage that does not meet the strict lending guidelines set by the Consumer Financial Protection Bureau (CFPB) for a Qualified Mortgage (QM). These loans are designed for borrowers who may not fit the traditional lending criteria but still have the financial means to repay a mortgage.

Who Can Benefit from a Non-QM Loan?

  1. Self-Employed Borrowers – Non-QM loans allow alternative income verification methods, such as bank statements, profit-and-loss statements, or 1099 forms, instead of traditional W-2s and tax returns.

  2. Real Estate Investors – Investors who own multiple properties or use rental income to qualify can benefit from DSCR (Debt-Service Coverage Ratio) loans, a type of Non-QM loan that bases approval on the property's cash flow rather than personal income.

  3. Borrowers with High Assets but Low Income – High-net-worth individuals with substantial assets but irregular or minimal documented income can qualify using asset depletion methods.

  4. Foreign Nationals – Non-U.S. citizens who want to purchase property in the U.S. but lack traditional credit history or income documentation may qualify.

  5. Credit-Challenged Borrowers – Those with recent bankruptcies, foreclosures, or low credit scores can access financing through Non-QM loans, as they have more flexible underwriting.

  6. Gig Workers & Commission-Based Earners – Borrowers with fluctuating income, such as freelancers, contractors, or sales professionals, can use bank statement loans or other income-verification methods.

  7. Homebuyers Needing Interest-Only or Unique Loan Structures – Some Non-QM loans offer interest-only payments, balloon payments, or other non-traditional structures to fit specific financial strategies.

Benefits of a Non-QM Loan:

  • Flexible Income Verification – Allows alternative documentation, such as bank statements or rental income.

  • Credit Flexibility – Accepts borrowers with low credit scores, past financial hardships, or high DTI ratios.

  • Higher Loan Amounts – Some Non-QM loans exceed conforming or jumbo loan limits, making them useful for luxury homebuyers.

  • More Property Types Allowed – Can be used for investment properties, second homes, and mixed-use properties.

  • Custom Loan Terms – Offers options like interest-only payments or shorter-term financing for unique financial situations.