Non-QM Loans

A mortgage built around how you actually earn and manage money, not just what fits on a standard form.

What Is a Non-QM Loan?

Non-QM stands for "non-qualified mortgage." It simply means the loan is not backed by Fannie Mae or Freddie Mac and does not have to follow their standard underwriting rulebook, things like a fixed debt-to-income ceiling or W-2 income documented in a specific way.

That does not mean the loan is risky or unregulated. It means the lender is allowed to look at a fuller picture of your finances, things like bank deposits, rental income, or the cash flow a property generates, to decide whether you qualify. For a lot of borrowers, that fuller picture is a much more honest reflection of their ability to pay than a tax return alone.

Why Non-QM Is Having a Moment

If it feels like you're hearing "Non-QM" more often, you are. This is not a niche corner of the market anymore, it is one of the fastest-growing parts of lending right now, and it is worth understanding why.

$175B Projected Non-QM originations in 2026, up 62% from $108 billion in 2025
20.8% Share of July 2026 mortgage production that was nonconforming (Non-QM plus jumbo), up nearly 4 points year over year
63.9% Combined share of Non-QM production from DSCR/investor loans and bank statement loans

Conforming loans, the traditional Fannie and Freddie box, made up 47.3% of production in July 2026, down from 52.2% a year earlier. Self-employed borrowers, real estate investors, and high earners with complex income are increasingly the ones driving originations, and lenders have built real, well-tested programs to serve them.

The credit performance data backs this up. Across Non-QM loans securitized since 2018, roughly $281 billion worth, cumulative losses sit at just 3.6 basis points. Out of 580,000 of those loans, only about 1,000 resulted in a loss over $10,000. Non-QM does not mean unqualified. It means qualified a different way.

Who Non-QM Loans Are Built For

  • Self-employed borrowers whose tax returns, after deductions, understate what they actually bring home each month.
  • Real estate investors who want a loan approved on a property's rental income rather than their personal income.
  • 1099 contractors and gig workers without a traditional two-year W-2 history.
  • Borrowers with a recent credit event, like a bankruptcy or foreclosure, who are ready to buy again before conventional guidelines would allow it.
  • High-net-worth borrowers whose assets, not monthly income, are the strongest case for repayment ability.

The Main Types of Non-QM Loans

Bank Statement Loans

Income is verified using 12 to 24 months of personal or business bank statements instead of tax returns. This is one of the two largest Non-QM categories, making up roughly 30.6% of Non-QM production, and it exists specifically because tax write-offs can make a thriving self-employed borrower look "unqualified" on paper.

DSCR Loans

DSCR stands for Debt Service Coverage Ratio. Instead of looking at your personal income at all, the lender looks at whether the property's rental income covers its own mortgage payment. This is the largest single category of Non-QM lending, roughly a third of Non-QM production and by some estimates about half of all Non-QM loan collateral, so it gets its own dedicated page. See the full breakdown on the DSCR Loans page.

Asset Depletion Loans

Qualification is based on your liquid assets, retirement accounts, and investments, converted into an effective monthly income figure. Built for borrowers who are asset-rich but do not draw a large regular paycheck.

Jumbo and High-Balance Non-QM

Loan sizes above $1 million now make up about 28% of new Non-QM production, up from 20% in 2018, and loans above $1.5 million have grown from 10% to 15% of production over that same period. Non-QM has become a standard path for financing larger, more complex properties.

What to Expect: Rates, Down Payments, and Documentation

I believe in explaining the tradeoffs, not just the upside. Here is the honest version.

  • Rates and fees on Non-QM loans typically run a bit higher than a conventional loan, since the lender is taking on flexibility in how it verifies your ability to repay.
  • Down payments are generally larger than a conventional minimum, often in the 10% to 25% range depending on the program, credit profile, and loan amount.
  • Documentation still matters. You will still provide bank statements, asset records, credit history, and, for DSCR loans, a property appraisal with a rent schedule. It is a different path, not a shortcut.

For a lot of my clients, that tradeoff is an easy one. The alternative is not qualifying at all, or waiting years for their tax returns to "catch up" to their real income.

Is a Non-QM Loan Right for You?

Non-QM is not a fallback option or a last resort. It is a purpose-built tool for borrowers whose financial life does not fit neatly into a conventional underwriting box, and with over 300 wholesale lending partners, I can usually match your specific situation, self-employment, an investment property, a recent credit event, to a program built for it rather than trying to force a conventional fit.

If you are not sure which category you fall into, that is exactly what a conversation is for. I will walk through your income, your goals, and your timeline, and explain honestly whether Non-QM is your best path or whether a conventional or government-backed loan actually serves you better.

Common Questions About Non-QM Loans

Does "Non-QM" mean the loan is risky?

No. Non-QM means the loan does not follow the specific underwriting formula Fannie Mae and Freddie Mac require, not that it lacks underwriting altogether. These loans are still fully documented and still carry real qualification standards, they just weigh different evidence, like bank deposits or rental cash flow, to reach the same conclusion: can you afford this loan.

Will I pay a higher interest rate on a Non-QM loan?

Usually, yes, Non-QM rates tend to run somewhat higher than conventional rates. In exchange, you get underwriting flexibility that a conventional loan cannot offer. I will always show you the actual rate and payment for your scenario so you can weigh that tradeoff with real numbers, not assumptions.

What credit score do I need for a Non-QM loan?

It varies by program and lender, and there is no single universal minimum. What matters more than a specific number is the full picture, credit history, reserves, down payment, and the strength of your income documentation. I can tell you where you stand once we look at your actual file.

Can I buy an investment property without showing my personal income?

Yes, that is exactly what a DSCR loan is built for. Qualification is based on the property's projected rental income covering its mortgage payment, not your personal pay stubs or tax returns. It is one of the most popular tools real estate investors use to keep scaling a portfolio.

How much down payment should I plan for?

Plan on more than a conventional minimum, generally somewhere between 10% and 25% depending on the specific program, your credit profile, and the loan amount. I will give you an exact figure once we identify the right program for your situation.