Non Qualified Mortgage (Non-QM) Loans

A non-qualified mortgage (non-QM) is a mortgage loan designed to help investors and homebuyers who can't meet the strict criteria of a qualifying mortgage.Examples include using bank statements, rental agreements in lieu of tax returns as income. Because of the more flexible qualification requirements.Non-QM loans open up real estate investment opportunities to a broader group of individuals.


The main reasons borrowers seek out a non-qualified mortgage are:

Limited documentation –Tax Returns not needed

Debt To Income Ratio greater than 43%

Low Credit Scores

Loans to Legal entities (LLC), Non-Citizens/Foreign Nationals


Advantages of Non-QM loans

Alternative Documentation - Bank Statements and/or Rent Rolls instead of Tax Returns

Can be made to legal entities, family trusts, and LLC’s

Do not require mortgage insurance

Can be made on commercial properties, both residential and business

Can be consolidated with other mortgage loans –Covering multiple properties

Enables buyers with low credit scores to qualify for a mortgage

Disadvantages of Non-QM loans

Interest rate and fees may be higher on a non-QM loan

Non-QMs cannot be sold to Fannie Mae and Freddie Mac

Non-QMs have limited investors and lenders


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