Non-QM Loans: A Complete Guide

Key Features of Non-QM Loans

• Flexible income verification (bank statements, 1099s, assets)

• Loan amounts often up to $3M+

• Available for primary, second homes, and investment properties

• Credit scores down to 620 in some programs

• Interest-only payment options available

Minimum Qualifications

Each lender has unique Non-QM programs, but most require:

• Credit Score: 620+ (some go lower with compensating factors)

• Down Payment: 10–20% depending on loan type and risk profile

• DTI Ratio: 43–50% max depending on documentation

• Income Verification: Alternatives like bank statements, 1099s, or P&L statements

• Reserves: May require 6–12 months depending on the loan

Required Documents

Documents vary based on the program, but generally include:

• 12–24 months of personal or business bank statements

• P&L statements (if required)

• Proof of assets

• Credit report and ID

• Rental income documentation (if applicable)

Common Non-QM Programs

• Bank Statement Loans – Use business or personal bank statements to prove income

• 1099-Only Loans – Designed for independent contractors

• DSCR Loans – Based on property cash flow rather than personal income

• Asset-Qualifier Loans – Use liquid assets to qualify in place of income

• Interest-Only Loans – Lower monthly payments by paying only interest for a period

Seller Concessions

Seller concessions vary by lender but typically follow these guidelines:

• Primary residence: up to 6%

• Investment properties: 2–4% depending on LTV

Property Types Allowed

• Single-family homes, condos, and townhomes

• 2–4 unit properties

• Non-warrantable condos (varies by lender)

• Investment and short-term rental properties