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.
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%
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
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.