Understanding Non-QM Mortgages
Non-QM (Non-Qualified Mortgage) loans are designed for borrowers who may not meet the rigid income or documentation requirements of traditional home loans. These flexible programs are ideal for self-employed individuals, investors, or borrowers with complex financial profiles.
What Is a Non-QM Mortgage?
Qualified Mortgages (QM) follow guidelines set by federal agencies, including strict DTI ratios, fixed terms, and conventional documentation. Non-QM loans break from this mold, offering custom underwriting and a broader path to home financing—while still meeting federal lending laws.
Why Choose a Non-QM Loan?
- Flexible Documentation: Use bank statements, assets, or rental income in place of W-2s and tax returns.
- Creative Loan Structures: Interest-only periods, adjustable terms, and tailored repayment plans.
- Expanded Eligibility: Especially useful for self-employed borrowers, investors, and retirees.
Who Are Non-QM Loans Best For?
- Self-Employed Professionals: No W-2s? No problem—bank statements may be enough.
- Real Estate Investors: Use property cash flow to qualify (DSCR loans).
- Borrowers with Irregular Income: Great for retirees or commission-based earners.
- Recently Recovered Credit: Non-QM may allow you to move forward faster.
Types of Non-QM Loan Programs
- DSCR Loans (Debt-Service Coverage Ratio)
Qualify based on property cash flow—not personal income. - Bank Statement Loans
Use 12–24 months of personal or business statements to verify income. - Asset-Based Mortgages
Leverage assets like retirement funds, stocks, or savings to show repayment ability. - Interest-Only Loans
Make interest-only payments for the first 5–10 years—ideal for cash flow planning. - ITIN Loans
For borrowers with an Individual Taxpayer Identification Number (instead of SSN).
Pros & Cons of Non-QM Mortgages
Pros
- Alternative income verification methods
- More lenient credit and DTI guidelines
- Diverse loan types and terms available
Cons
- Interest rates may be higher
- Some loans may include prepayment penalties
- Alternative documentation can still require detail
Is a Non-QM Loan Right for You?
If you don’t fit traditional guidelines but have a reliable way to repay, Non-QM loans can open the door to homeownership or property investment.
At Money Well Lending, we specialize in custom mortgage solutions—including bank statement, DSCR, asset-based, and interest-only financing—tailored to your goals and timeline.
Let’s talk today. Our Non-QM experts are here to help you qualify with confidence and clarity.