A Qualified Mortgage Follows Strict Federal Guidelines
W-2 income. Full tax returns. Debt-to-income limits set by Fannie Mae and Freddie Mac. If your income is complex, your taxes show write-offs, or you're an investor — you may not "qualify" on paper even though you're financially strong.
Non-QM loans use alternative documentation and flexible qualification methods to tell your real financial story. You will pay a slight premium in rate for this flexibility — but for the right borrower, it's absolutely worth it.
Non-QM doesn't mean non-creditworthy. It means non-cookie-cutter.
Built for business owners whose income doesn't fit a W-2
Bank Statement Loans
Most PopularPerfect for:
Self-employed borrowers, business owners, freelancers
Instead of tax returns (which are often loaded with write-offs that make income look artificially low), lenders use 12 or 24 months of consecutive bank statements to calculate your qualifying income. Business bank statements or personal bank statements are both eligible.
What lenders look for:
- A U.S.-based business actively generating stable revenue
- Consistent, recurring deposits over the statement period
- Income calculated based on average monthly deposits — not what your tax return says
Borrower expectations:
- Rates will be slightly higher than conventional — you're paying for flexibility
- You'll need all 12-24 months of statements (no gaps)
- If you submit tax returns along with bank statements, many lenders will default to standard doc rules — don't mix and match
- 12-month average is the floor; 24 months gives a stronger, more stable picture
💬 The Real Talk
If you wrote off $80,000 in business expenses last year and your tax return shows $40,000 in net income — but your bank deposits show $200,000 — a bank statement loan tells the true story. This is one of the most common Non-QM scenarios we see.
Quick Stats
DSCR Loans
Investor FavoritePerfect for:
Real estate investors, landlords, portfolio builders
DSCR loans qualify you based on the property's income, not yours. The lender calculates whether the rental income covers the mortgage payment. A DSCR of 1.00 means the rent exactly covers the mortgage. A DSCR above 1.00 means the property cash flows positively.
The Math
Monthly Rent ÷ Monthly PITI = DSCR
Example: $2,500 Rent ÷ $2,200 PITI = 1.13 DSCR ✅
Borrower expectations:
- Your personal income isn't the qualifying factor — the deal has to work on its own
- Most lenders require DSCR ≥ 1.00 for standard pricing (some allow below 1.00 at higher rates)
- Manual underwriting only — no AUS (automated underwriting system) involved
- Many lenders require at least 12 months of experience owning/managing income-producing real estate within the last 36 months
- You can hold title in an LLC with a personal guaranty
💬 The Real Talk
DSCR is the investor's best friend. You could own 10 properties and still qualify — because each property stands on its own numbers. Your DTI doesn't matter. Your tax write-offs don't hurt you. The deal either pencils or it doesn't.
Quick Stats
1099 Income Loans
Contractors & GigPerfect for:
Independent contractors, commission-only earners, gig economy professionals
If you receive 1099s instead of W-2s, you can qualify using 1 or 2 years of 1099s at a 90% net margin (lenders apply a 10% expense factor to reflect business costs). No full tax return required.
The Math
Total 1099 Income × 90% ÷ 12 = Monthly Income
Example: $180,000 × 90% = $162,000 ÷ 12 = $13,500/mo
Borrower expectations:
- Minimum 1-year history of 1099 income in the same line of work
- YTD earnings must be within 10% of prior year (or higher) — trending down raises flags
- If you recently switched from W-2 to 1099 with the same employer, you may qualify after less than 2 years
- Two months of bank statements required to verify consistent deposit activity
💬 The Real Talk
Realtors, mortgage pros, independent sales reps, consultants, and healthcare contractors — this program was made for you. If your income is consistent and you're in a stable industry, 1099 loans are a clean, straightforward path.
Quick Stats
Asset Depletion Loans
High Net WorthPerfect for:
Retirees, high-net-worth individuals with significant assets but limited monthly income
Instead of proving income, you prove wealth. Lenders take your liquid assets (savings, investment accounts, retirement accounts) and create an imputed monthly income by dividing them over 84 months (7 years).
The Math
Qualifying Assets ÷ 84 months = Monthly Income
Example: $1,400,000 ÷ 84 = $16,666/month
Asset Weighting (Typical)
Assets used for down payment are excluded from the calculation
Borrower expectations:
- You must have substantial liquid assets — this isn't for someone with $50K in savings
- Gift funds, restricted stock, and non-vested retirement accounts are ineligible
- Assets need to be documented with full statements showing account holder, balance, and time period
💬 The Real Talk
You worked your whole life to build wealth. This loan lets that wealth work for you — even if you're living off investments and your W-2 income is zero. It's one of the most underutilized loan types we see.
Quick Stats
P&L Only Loans
Clean ProfilePerfect for:
Self-employed borrowers with strong business cash flow who prefer not to provide bank statements
A CPA-prepared Profit & Loss statement — no tax returns, no bank statements required — is used to qualify the borrower based on business profitability. The lender takes your net profit and uses it as qualifying income.
Borrower expectations:
- Minimum 700 credit score — this is a clean-profile program
- Maximum LTV: 80% purchase / 75% rate-term refi / 70% cash-out
- Must be self-employed for minimum 2 years in the same profession
- Must own at least 50% of the business
- Borrowers who file their own taxes are not eligible — must use a licensed CPA, EA, CTEC, or Tax Attorney
- Maximum loan amount typically around $1.5M
💬 The Real Talk
This is the "trust me, I run a real business" program — and it requires the least documentation of any income method. But the guardrails are tighter: high credit score, significant equity, and a licensed tax professional to validate your numbers. If you check those boxes, it's one of the cleanest paths to qualification.
Quick Stats
Which Non-QM Fits You?
| Loan Type | Who It's For | What Qualifies You | Min Credit |
|---|---|---|---|
| 🏦 Bank Statement | Self-employed / Business owners | 12-24 months deposits | 620-660+ |
| 📊 DSCR | Real estate investors | Property cash flow | 620-660+ |
| 📝 1099 Income | Contractors / Commission earners | 1-2 years of 1099s | 620-660+ |
| 💰 Asset Depletion | Retirees / High net worth | Liquid asset balance | 660-680+ |
| 📄 P&L Only | Self-employed (clean profile) | CPA-prepared P&L | 700+ |
✓ The Advantages
- Flexible qualification — your real financial picture, not just your W-2
- Available for primary, second home, and investment properties
- Loan amounts up to $3M+ depending on program
- Multiple income documentation methods available
⚠ Know Before You Apply
- Slightly higher rates — typically 0.5% to 1.5% above conventional
- Manual underwriting only — no automated approval, more documentation review
- Prepayment penalties may apply — usually 2-3 years, factor into planning
- Higher down payment requirements on some programs
Your Income Is Complex.
Your Mortgage Shouldn't Be.
If your income is complex, your taxes are optimized, or you're building a real estate portfolio — there's a loan designed specifically for your situation. Let's find the right program for your financial picture.