Non-QM Mortgage Loans for Self-Employed Borrowers, Investors & Foreign Buyers

Non-QM stands for Non-Qualified Mortgage, a loan that doesn't meet the Consumer Financial Protection Bureau's definition of a Qualified Mortgage under Dodd-Frank. QM loans require strict documentation: W-2 income, DTI under 43% typically, full tax returns. Non-QM loans use alternative qualification methods such as bank statement income, DSCR for investment properties, asset depletion, or international credit. Non-QM is NOT subprime, most Non-QM borrowers have strong credit and large down payments, they just don't fit cookie-cutter income documentation rules.

The most common profiles: self-employed borrowers whose Schedule C net understates real income, real estate investors with multiple properties, foreign nationals buying US property, ITIN borrowers without a Social Security Number, borrowers with recent credit events (BK or foreclosure) still in QM waiting periods, asset-rich/income-poor borrowers (retirees, business sellers), and 1099 / commission-only earners. Credit scores typically 640+ for most programs, 620 for some. Down payments typically 15-30% depending on program.

Typically 1-3% above conforming. As of 2026, conventional 30-year fixed runs around 5.875%, while Non-QM Bank Statement loans run around 7.0-8.5%, DSCR investor loans 7.5-9.0%, and Foreign National 8.0-9.5%. Exact pricing depends on the program, your credit score, LTV, occupancy (primary vs investment), and reserves. Pricing improves dramatically with higher credit scores and lower LTV.

The lender averages your deposits across 12 or 24 months of personal or business bank statements. Personal account statements typically use 100% of qualifying deposits (after excluding transfers and non-business income). Business account statements typically use 50% of deposits (to back out business expenses). The average becomes your qualifying monthly income. Bank Statement programs accept self-employed borrowers whose tax-return income understates real cash flow because of legitimate deductions.

DSCR stands for Debt-Service Coverage Ratio. It's a Non-QM program designed for real estate investors. The loan qualifies on the property's rental income covering the mortgage payment (PITI), not on the borrower's personal income, employment, or DTI. The DSCR is the ratio of monthly rent to monthly PITI: a DSCR of 1.0 means rent equals payment, 1.25 means rent is 25% above payment. Most DSCR programs accept DSCR of 1.0 or above; some accept down to 0.75 with higher down payment. No tax returns, no W-2s, no employment verification needed.

Yes, but the minimum varies by program. Bank Statement and DSCR programs typically require 640+; some go to 620 with compensating factors (higher down payment, more reserves). Asset Depletion programs typically require 680+. ITIN programs accept 640+ on the borrower's ITIN-linked credit profile. Foreign National programs accept an international credit report from your home country instead of US FICO. Borrowers with no credit at all (truly thin file) need ITIN or Foreign National programs.

Yes. Foreign National Non-QM programs are designed exactly for this. The lender accepts an international credit report from your home country (typically the equivalent of a US FICO), foreign tax returns or asset statements as income docs, and a bank reference letter from your home-country bank. Down payments are typically 25-35%. Available across most states for purchase or refinance, primary residence, second home, or investment property.

ITIN (Individual Taxpayer Identification Number) loans are for borrowers without a Social Security Number who have an ITIN issued by the IRS, common among undocumented residents with US income, certain non-resident aliens, and other non-SSN holders. Requirements: valid ITIN, 2 years US tax returns (filed with ITIN), 24 months bank statements OR W-2/1099 documentation, credit history (US credit profile linked to ITIN), and 15-25% down. Rates typically 1-2% above conventional. Most lenders allow primary residence or 1-4 unit rentals.

21-30 days on most programs once you're in underwriting, similar to QM. DSCR investor loans on simple files can close in 14-18 days. Foreign National and complex multi-document files can take 30-45 days because of additional verification steps. The rate-limiting factor on Non-QM is usually getting all the program-specific income documentation organized (24 months of bank statements, foreign credit report, etc.) rather than the underwriting itself.

Varies by program. Bank Statement loans for primary residences typically require 15-20% down. DSCR investor loans typically 20-25%. Asset Depletion 20-25%. ITIN 15-25%. Foreign National 25-35%. Recent credit event programs 20-30% depending on time since the event. Higher down payment improves your rate and unlocks more lenders, lower down payment narrows your options and increases the rate.

QM (Qualified Mortgage) loans meet CFPB rules for Dodd-Frank: documented W-2 or tax-return income, DTI under 43% (typically), no risky features (interest-only, negative amortization), strict appraisal and process requirements. QM is conventional, FHA, VA, USDA, and most jumbo. Non-QM is everything outside that framework: alternative income docs, higher DTI allowed, investor-only DSCR, foreign credit, ITIN, recent credit events. Non-QM rates run higher because the loans are sold to private investors rather than government-sponsored entities (Fannie/Freddie/Ginnie).

Probably yes, through a Non-QM Recent Credit Event program. QM rules require 2-4 years after Chapter 7 discharge (Fannie 4 years, FHA 2 years). Non-QM Recent Credit Event programs accept borrowers as soon as 1 day after discharge with a sufficient down payment (typically 25-30%) and re-established credit. Pricing depends on time elapsed, current credit score, and down payment. A 1-year-out file with 25% down and a 680 credit score is a routine Non-QM scenario for several of our lender partners.