Non-QM mortgage programs, explained
Non-QM ("non-qualified mortgage") loans serve borrowers who don't fit the standard agency boxes — self-employed, foreign nationals, recent credit events, asset-rich but income-light, and more. Below are the 10 main program categories and what each typically requires.
Run the estimatorDSCR loans are for real estate investors. Instead of looking at your personal income, the lender qualifies the property: if the rent it generates is at least 1.0× the monthly mortgage payment (PITIA), it usually qualifies. Some lenders go down to 0.75× DSCR with a rate adjustment.
- Real estate investors buying or refinancing rental properties
- Borrowers whose tax returns don't show enough qualifying income
- Borrowers who own multiple investment properties
- • Property must generate enough rent to cover the mortgage — appraiser provides a market-rent estimate (Form 1007).
- • First-time investors are accepted by most lenders but may have lower max LTV (~75%).
Bank statement programs let self-employed borrowers qualify on the basis of 12 or 24 months of personal or business bank deposits. The lender averages your qualifying deposits, applies an expense factor (commonly 50%), and uses that as your monthly income.
- Self-employed borrowers who write off heavy expenses on their tax returns
- Business owners (LLCs, S-corps, sole props) with 2+ years of operations
- Borrowers whose AGI doesn't reflect actual cash flow
- • Most lenders want 2+ years self-employed. 1-year programs exist but at lower max LTV.
- • Expense factor varies by industry: 50% is typical for service businesses, 25% for product, 75% for trucking.
P&L Only programs accept a CPA-prepared profit & loss statement in lieu of bank statements. Faster to underwrite if you have a clean P&L, but typically requires higher FICO and lower LTV than bank statement programs.
- Established self-employed borrowers with CPA relationships
- Borrowers who want to skip the bank statement deep-dive
- • Some lenders cross-check the P&L against bank deposits to catch fabrication.
- • CPA must be unaffiliated (not the borrower or a relative).
Asset Depletion programs treat liquid assets as if they were income. Total qualifying assets ÷ depletion term (typically 84 or 120 months) becomes your qualifying monthly income. Different asset classes are haircut differently: 100% of cash, ~70% of stocks, ~60% of retirement accounts.
- Borrowers with significant liquid assets but limited current income
- Retirees and pre-retirees
- Recent business sale proceeds, inheritance recipients
- • Need 2+ months of asset statements showing the liquid balance.
- • Pre-tax retirement accounts (401k, traditional IRA) usually haircut more aggressively if borrower is under 59½.
Asset-Based programs ignore income entirely. The lender qualifies you purely on liquid assets — typically 1.5–2x the loan amount required in qualifying assets. Reserved for high-net-worth borrowers who can prove substantial liquidity.
- Borrowers with $1M+ in liquid assets
- Recent liquidity event (business exit, inheritance)
- • Asset reserves often required at 1.5–2× the loan amount.
- • Maximum LTV is lower than other programs because there's no income to fall back on.
Foreign National programs are for non-resident foreign citizens buying US real estate (almost always investment property). No US FICO required; lenders use international credit references plus reserves. Higher down payment (30%+) and reserves (12 months) are standard.
- Non-resident foreign citizens
- Buyers from Canada, Mexico, Europe, Asia investing in US real estate
- • Property must be investment — owner-occupied not allowed.
- • Reserves usually required in a US bank account.
- • Income documented via international tax returns or CPA letter from country of origin.
ITIN programs serve borrowers who have an Individual Taxpayer Identification Number but no Social Security Number — typically immigrants who file US taxes. Alternative credit (utility bills, rent history) is often accepted in lieu of a traditional FICO score.
- Immigrants without an SSN
- Long-term US residents who file taxes via ITIN
- • Two years of US tax returns filed under the ITIN typically required.
- • Some lenders accept alternative credit (12+ months utilities, rent, insurance).
1099 Only programs are for independent contractors. The lender takes your annual 1099 income, applies an expense factor (often 10%), and uses the result as your qualifying income. Faster than bank statement programs since you only need the 1099 forms.
- Independent contractors paid via 1099
- Real estate agents, consultants, gig workers
- Borrowers who don't write off heavy business expenses
- • Most lenders want 2 years of 1099s; 1-year programs exist with lower LTV.
- • Expense factor on 1099 income is usually small (5–10%).
Jumbo Non-QM serves loan amounts above standard agency jumbo limits ($766k–$1.149M depending on county) for borrowers who don't fit traditional jumbo guidelines. Useful for very large loans, complex income, or unique property types.
- Loan amounts ≥ $1M
- High-income borrowers with complex tax structures
- Buyers in HCOL markets (California, NYC, etc.)
- • Reserves of 12+ months commonly required.
- • Often combined with bank statement, P&L only, or asset depletion qualification methods.
These programs serve borrowers who've had a recent credit event (BK, foreclosure, short sale) and don't yet meet conventional or agency seasoning requirements. Higher rates and lower LTVs reflect the elevated risk.
- Borrowers within 24 months of a bankruptcy discharge
- Borrowers within 24 months of a foreclosure or short sale
- • Seasoning windows vary: BK Ch. 7 typically 12 months, BK Ch. 13 dischargeable, FC/SS 12–24 months.
- • Often paired with bank statement or full-doc qualification.
Fix-and-flip, BRRRR, or new construction?
Sized by LTV, LTC, and LTARV — different math from long-term mortgages.
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Real-time DSCR with required-rent and max-loan derivations.
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