At a Glance
- Down payment varies by program
- Minimum credit score of 620+
- Best for self-employed, investors
Non-QM (Non-Qualified Mortgage) loans provide flexible financing solutions for borrowers who don't fit the traditional lending mold. Whether you're self-employed, a real estate investor, or have non-traditional income sources, these programs offer alternative ways to qualify for a mortgage.
DSCR Loans for Investors
Debt Service Coverage Ratio (DSCR) loans are designed for real estate investors and are qualified based on the property's rental income rather than personal income. If the rental income covers the mortgage payment, you may qualify regardless of your personal tax returns or employment status. This makes DSCR loans ideal for building a rental portfolio.
Bank Statement Programs
Bank statement loans allow self-employed borrowers to qualify using 12-24 months of personal or business bank statements instead of tax returns. This is perfect for business owners who show less income on tax returns due to legitimate deductions but have strong cash flow through their accounts.
1099 and Asset-Based Programs
1099 programs are designed for independent contractors and gig economy workers who receive 1099 income. Asset-based programs allow you to qualify using liquid assets like savings, investments, or retirement accounts. These flexible options help borrowers with non-traditional income documentation become homeowners.
Eligibility Requirements
- Minimum credit score typically 620-660+
- Down payment requirements vary (often 10-25%)
- DSCR: Property must generate sufficient rental income
- Bank statement: 12-24 months of statements required
- 1099: Two years of 1099 income documentation
- Asset-based: Sufficient liquid assets to qualify
Frequently Asked Questions
What does Non-QM mean?
Non-QM refers to mortgages that don't meet the Consumer Financial Protection Bureau's 'Qualified Mortgage' standards. They're not subprime loans—they simply use alternative documentation methods for qualified borrowers.
Are Non-QM loan rates higher?
Non-QM rates are typically 0.5-2% higher than conventional loans due to the additional flexibility they offer. However, they make homeownership possible for many who wouldn't otherwise qualify.
Can I use a Non-QM loan for investment properties?
Yes! DSCR loans are specifically designed for investment properties. Other Non-QM programs can also be used for investment properties depending on the program requirements.