The three we hear most: "Is this subprime?" No — it's for creditworthy borrowers with non-traditional income. "Are rates way higher?" No — about 0.5–2% over conventional, softened by no mortgage insurance. "Am I stuck with it?" No — many refinance into conventional later. Details below and on Requirements and Eligibility.
Basics
What is a non-QM loan?
A mortgage outside the government's Qualified Mortgage box — it uses deposits, rents, or assets instead of tax returns, for creditworthy borrowers. See overview.
Is non-QM the same as subprime?
No — creditworthy borrowers with non-traditional income. Rates are modestly above conventional, not subprime-level.
Why do non-QM loans exist?
Post-2008 rules made conventional loans require full tax docs and a 43% DTI cap. Non-QM serves the many good borrowers that excludes.
Are non-QM loans safe/legitimate?
Yes — they're fully regulated, ability-to-repay loans from established lenders, just documented differently.
Who offers non-QM loans?
Specialized non-QM investors and portfolio lenders. As a broker we compare many to find your best terms.
Programs & qualifying
What non-QM programs exist?
Bank statement, DSCR, asset qualifier, ITIN, 1099, P&L, and foreign national.
What credit score do I need?
Often ~640 floor, 680–700 for best pricing; asset qualifier wants 700+. Higher = lower rate and more LTV.
Can I use one for a primary home?
Yes — bank statement, asset, 1099, and P&L finance primary/second homes. DSCR is investment-only.
Can investors use non-QM?
Yes — DSCR qualifies on rental income, no property cap, LLC vesting allowed.
Do I need tax returns?
Usually not — deposits, rental income, or assets qualify you instead.
How do I know which program fits?
By how you earn. A broker matches your income reality to the right program — see Eligibility.
Rates & costs
Are non-QM rates higher?
Somewhat — ~0.5–2% over conventional, not subprime-level. No MI softens the all-in cost. See Rates.
Is there mortgage insurance?
No — non-QM has no MI at any LTV, ever.
Are there prepayment penalties?
Some programs, especially DSCR. Owner-occupied less so. Confirm and compare before locking.
What down payment?
10–25% by program and credit. See Requirements.
What reserves?
3–6 months typically (6–12 on larger/investment). Retirement/investment accounts usually count.
Process & flexibility
How fast do they close?
Often 21–30 days — faster than conventional, since there's no lengthy tax/employment verification.
Can I refinance out later?
Yes — many buy with non-QM now, then refinance to conventional once docs support it. It can be a bridge.
Can I close in an LLC?
For DSCR, yes — LLC vesting is common. Owner-occupied programs use individual vesting.
Should I check conventional first?
Yes — if you qualify conventionally it's usually cheaper. We check that before recommending non-QM.
Don't see your question?
Call 949-379-5320 or start online — we'll answer yours.
Reviewed by the licensing team at Save Financial, a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) founded in 2009 and serving all 58 counties from offices in Newport Beach and Marina del Rey.