A non-qualified mortgage loan, or NON-QM loan is a mortgage that allows you to qualify by alternative means. At the core of any mortgage qualification is sufficient proof that a borrower has the ability to repay the amount financed and a non-qm loan verifies this ability to repay in different ways. Non-qm loans are a flexible option and include bank statement loans (deposits are used as income), DSCR (loans on investment properties that allow you to qualify based off of market rents), and asset based loans, to name a few.
Non-qm loans are inherently riskier, and thus may have a higher rate or cost. However, non-qm loans provide the possibility to own or refinance a home for investors, retirees, and business owners, who oftentimes do not have the traditional income source of a W2 salary or hourly job.
Bank Statement Loans
At the core of non-qm loans are bank statement loans, where the deposits of your business or personal bank accounts are added up and divided by 12 or 24 months in order to qualify.
DSCR Loans
DSCR loans are available on investment properties, where a borrower can qualify based off of actual rents received, or even market rents of similar properties.
Asset Based Loans
Asset based loans are loans that take into account liquid assets that a borrower has. A formula is applied to the balance to arrive at the monthly income used to qualify for the mortgage.
