What's a Non-QM Loan?

Non-QM loans are for borrowers whose income is real but doesn't fit the standard documentation box. That most often means self-employed borrowers and business owners, 1099 contractors, real estate investors, retirees living on accumulated assets, and foreign nationals purchasing in the United States.

The common thread is simple: the money is there, but a tax return or a pay stub isn't the right way to show it.

A bank statement loan documents income with your actual deposits rather than your tax returns. Lenders typically review twelve to twenty-four months of personal or business bank statements and apply an expense factor to the deposits to arrive at a qualifying income figure.

It is designed for self-employed borrowers whose legitimate business write-offs reduce taxable income to a number that doesn't reflect real cash flow. The expense factor and statement period vary by lender and business type.

A DSCR loan qualifies an investment property on its own rental income measured against the mortgage payment — the property, not the borrower's personal income, carries the file.

Because personal income documentation moves out of the picture, DSCR financing is often used by investors building a portfolio, or by borrowers whose personal returns are complex.

Asset depletion converts documented liquid assets into a qualifying monthly income figure on paper. Savings, brokerage balances, and certain retirement accounts are translated into an income equivalent for underwriting purposes.

The assets are not spent, transferred, or pledged — they are simply the evidence of your capacity to repay. This is common for retirees and for borrowers between liquidity events.

Honestly: pricing is typically somewhat higher than a comparable conventional loan, because the documentation method and risk profile are different.

How much higher depends entirely on the scenario — documentation type, credit profile, equity, property type, and occupancy all move pricing. No figures are quoted on this page by design; a real number requires a real scenario. Rates change with market conditions and specified rates may not be available for all borrowers.

Yes. Non-QM loans are originated through regulated lenders and are subject to federal ability-to-repay rules. Income must still be documented and verified — the method is different, not absent.

These are not the pre-2008 stated-income loans. Underwriting reviews documentation, assets, credit, and reserves before a lender issues an approval in writing.

Qualification is a conversation about how your income is documented, then a review of the pieces below.

• Income documentation method — bank statements, assets, rental income, or 1099s
• Time self-employed or in your current business
• Credit profile and payment history
• Down payment or equity, and the source of those funds
• Property type and occupancy — primary, second home, or investment
• Reserves remaining after closing

The simplest way to find out where you stand is to send your scenario over. Start with a scenario review — it takes about two minutes and there's no credit pull.