What Is a Non-QM Loan?

A Non-QM (Non-Qualified Mortgage) loan is a type of home loan designed for borrowers who may not meet the strict criteria of traditional mortgage programs. These loans are ideal for self-employed individuals, investors, or those with unique income situations. Unlike conventional loans, Non-QM loans allow for more flexible underwriting standards and alternative documentation methods, making homeownership accessible to a broader range of applicants.

Non-QM Loan Requirements

While Non-QM loans offer flexibility, there are still certain requirements borrowers typically need to meet:

Credit Score: A minimum credit score of around 620 is common, though some lenders may accept lower.

Proof of Income: Alternative documentation such as bank statements, asset depletion, or profit and loss statements can be used.

Down Payment: Usually requires a higher down payment than traditional loans—typically 10% to 20%.

Debt-to-Income Ratio (DTI): More lenient DTI requirements, sometimes allowing over 50%, depending on the lender.

Benefits of a Non-QM Loans

  • Flexible Income Verification

    Ideal for self-employed individuals or those with irregular income sources.

  • Expanded Loan Options

    Can be used for investment properties, jumbo loans, and other non-traditional scenarios.

  • Credit Flexibility

    May be available to borrowers with recent credit events, such as bankruptcies or foreclosures.

Who Qualifies For a Non-QM Loan?

✓ Self-Employed Borrowers: Business owners or freelancers who may not have W-2s or traditional tax returns.

✓ Real Estate Investors: Those purchasing investment properties or using rental income to qualify.

✓ Borrowers with Credit Challenges: Individuals with past bankruptcies, foreclosures, or lower credit scores.

✓ High Net Worth Individuals: Those using assets rather than income to qualify for a mortgage.

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Non-QM Loan Process

1

Pre-Approval

Get pre-approved by submitting your financial documents and discussing loan options with a lender.

2

Identifying the Property

Choose the property you wish to finance, whether it’s a primary residence, second home, or investment.

3

Underwriting

The lender reviews your application, including alternative income documentation and credit history.

4

Final Loan Approval

Once all conditions are met, the lender issues final approval.

5

Closing

Sign your loan documents and officially close on your property.

What Can You Finance With a Non-QM Loan?

Primary Residences: For homebuyers who don’t meet standard mortgage criteria.

Second Homes: Great for buyers of vacation or seasonal properties.

Investment Properties: Ideal for real estate investors with rental income or portfolio-based qualifications.

Jumbo Loans: Financing for high-value properties that exceed conforming loan limits.

Frequently Asked Questions About Non-QM Loan

  • Yes. Non-QM loans are fully regulated and must comply with federal lending laws. They simply offer flexible criteria for those who don’t fit the traditional borrower profile.

  • Generally, yes. Because of the added risk and flexibility, interest rates on Non-QM loans are often slightly higher than traditional loans.

  • Yes. Many lenders offer Non-QM refinancing options, and you may even qualify for a traditional refinance later on.

  • The process typically takes 30–45 days, depending on the complexity of the application and documentation requirements.

Success Stories

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Michael & Sarah Rodriguez

★ ★ ★ ★ ★

Working with this team made the complicated Los Angeles market much easier to navigate. Their expertise in conventional loans saved us thousands in interest and helped us close quickly on our Silver Lake home.

First-time homebuyers

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James & Amelia Wilson

★ ★ ★ ★ ★

The 203K loan process seemed intimidating at first, but this team guided us through every step. We were able to transform a fixer-upper in Highland Park into our dream home while staying within our budget. Their contractor recommendations were excellent.

Renovation loan clients

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David Chen

★ ★ ★ ★ ★

After being turned down by two other lenders, I was losing hope of being able to purchase and renovate my first property. This team not only got my FHA 203K loan approved, but they also helped me understand exactly what renovations would add the most value in my Echo Park neighborhood.

Self-employed borrower

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