Non-QM Loans · 9 min read
Types of Non-QM Loans: A Field Guide to Every Major Program
“Non-QM” covers a family of mortgage programs, not one loan. Each solves a specific problem: income that doesn’t show on tax returns, a rental that should qualify on its own rent, wealth without a paycheck, or a credit event that’s too recent for agency rules. Here are the ten main types, what each uses to qualify you, and who each one is really for.
The ten main non-QM programs
| Program | Qualifies you on | Built for |
|---|---|---|
| Bank statement | 12–24 months of deposits | Self-employed with steady deposits |
| P&L | CPA- or preparer-signed P&L | Self-employed with messy or multi-account deposits |
| Asset depletion | Liquid assets turned into income | Retirees, high-net-worth borrowers |
| 1099 | 1099 forms | Contractors and gig workers |
| DSCR | The rental’s income | Real estate investors |
| No-ratio | Credit, equity, reserves | Borrowers who prefer not to state income |
| Interest-only | Varies | Cash-flow management, high earners |
| Foreign national | Foreign income and assets | Non-U.S. residents buying in the U.S. |
| ITIN | ITIN with alternative income docs | Borrowers without a Social Security number |
| Recent credit event | Standard or alternative income | Recent bankruptcy, foreclosure or short sale |
Income-based programs for the self-employed
Bank statement loans are the most popular non-QM loan. The lender averages 12 or 24 months of deposits and applies an expense factor on business accounts. If your write-offs make your returns look thin but your deposits are steady, this is usually the first program to price. We explain how business vs personal statements change the math.
P&L loans use a profit-and-loss statement prepared by a CPA, enrolled agent or licensed preparer. They help when deposits are seasonal or spread across several accounts. Many lenders also want a CPA letter.
1099 loans use your 1099 forms, often with a fixed expense factor, instead of the net income on your Schedule C. They suit contractors with one or two main payers.
Programs that don’t use your earnings
Asset depletion divides your liquid assets over a set number of months to create a qualifying income. Fannie Mae and Freddie Mac have conservative versions; non-QM versions use much shorter divisors. See how the agency and non-QM rules compare.
DSCR loans qualify an investment property on its rent compared with its payment. Your personal income isn’t used at all, and the loan can close in an LLC.
No-ratio loans skip income on a primary residence and lean on credit, equity and reserves instead.
Programs for specific situations
Interest-only payments aren’t allowed on qualified mortgages, so they live in non-QM. They’re useful when income is lumpy or you want a lower required payment, and often pair with bank statement or asset programs.
Foreign national and ITIN loans serve borrowers outside the Social Security system, using foreign income documentation or an ITIN.
Recent credit event programs allow a mortgage sooner after bankruptcy, foreclosure or short sale than agency waiting periods permit, usually with more down.
Picking the right type
Many borrowers qualify for more than one. A self-employed investor might fit bank statement, P&L and DSCR at once, and each can produce a different loan amount and price. Choosing between them is most of the work in a non-QM file.
As an independent mortgage broker, Save Financial prices several non-QM types side by side across 20+ wholesale lenders. If you’re new to the category, start with what makes a loan QM or non-QM.
About this article: Save Financial is a California-licensed independent mortgage brokerage (NMLS #377740, DRE #01875766) in business since 2009, with offices in Newport Beach and Marina del Rey, serving all 58 counties. We have closed hundreds of non-QM loans and shop 20+ wholesale lenders to match you with the right program. This article is general education, not a loan offer or commitment to lend. For a real quote, apply online or call 949-379-5320.