Non-QM (Non-Qualified Mortgage) loans provide financing options for borrowers who don’t fit traditional lending guidelines. It's more flexible in income verification and credit requirements, making them useful for self-employed borrowers, investors, and those with unique financial situations.

This criteria for qualification is set by investors, rather than Fannie Mae, Freddie Mac, and the FHA.

Bank Statement Loans

Self-employed borrowers, freelancers, and business owners who don’t have W-2 income but have strong cash flow.

Typical Criteria:

• 12-24 months of business bank statements

• Income calculated based on deposits (not tax returns)

• Higher down payments (typically 20%)

• Debt-to-income (DTI) ratio around 50%

Asset Depletion Loans

For high-net-worth individuals with significant assets but little or no traditional income documentation.

Typical Criteria:

• Assets (such as cash, stocks, bonds, or retirement funds) are used to demonstrate ability to repay

• A lender may divide total assets over a set period (e.g., 360 months) to determine qualifying income

• No employment or tax return verification required in many cases

• Minimum asset reserve requirements (varies by lender)

• Typically lower LTV (loan-to-value) ratios and higher credit score expectations

DSCR (Debt-Service Coverage Ratio) Loans

Real estate investors looking to qualify based on rental income rather than personal income.

Typical Criteria:

• Loan qualification based on the property's rental income

• DSCR is calculated as rental income ÷ mortgage payment (lenders prefer 1.0+ but some allow lower)

• No personal income verification needed

• Typically requires a larger down payment (20-25%)

• Higher interest rates than conventional loans

• Can be used for multiple investment properties

That's all for now.

If you need a connection to a loan officer that can provide these types of loans, fill out this form here.