Quick answer
A non-QM (non-qualified mortgage) loan is a home loan that documents your ability to repay with something other than the standard tax returns and pay stubs. The main types are bank statement, P&L, 1099, asset depletion, DSCR (investor), WVOE, ITIN and foreign national loans. They typically cost more than conventional loans and need a larger down payment, but they let borrowers with real income and messy paperwork buy or refinance.
Compare all eight
| Mortgage | How income is shown | Best fit | Home equity version |
|---|---|---|---|
| Bank statement mortgage | 12–24 months of deposits with an expense factor | Business owners with big write-offs | Bank statement HELOC |
| P&L mortgage | CPA- or preparer-reviewed profit and loss statement | Growing businesses with clean books | P&L HELOC |
| 1099 mortgage | Gross 1099 income minus a flat expense factor | Independent contractors and agents | 1099 HELOC |
| Asset depletion mortgage | Eligible assets divided over a set number of months | Retirees and investors with savings | Asset depletion HELOC |
| DSCR loan | Property rent vs. the full payment | Rental property investors | Investment property HELOC |
| WVOE mortgage | Employer's written verification of employment | W-2 commission and bonus earners | — |
| ITIN mortgage | ITIN tax filings or bank statements, alternative credit | Borrowers without a Social Security number | — |
| Foreign national mortgage | Passport, international credit, documented assets | Buyers living outside the U.S. | — |
Program guides
Bank statement mortgage
12–24 months of deposits with an expense factor.
Already own? Bank statement HELOC
Asset depletion mortgage
Eligible assets divided over a set number of months.
Already own? Asset depletion HELOC
WVOE mortgage
Employer's written verification of employment.
ITIN mortgage
ITIN tax filings or bank statements, alternative credit.
Foreign national mortgage
Passport, international credit, documented assets.
Which one fits you?
- You own a business with heavy write-offs: bank statement or P&L. See bank statement vs. P&L vs. 1099.
- You are paid on 1099s by a few clients: 1099 mortgage.
- You live on savings or investments: asset depletion.
- You are buying or refinancing a rental: DSCR loan, with a DSCR calculator.
- You are a W-2 employee with commission, bonus or a recent raise: WVOE.
- You file taxes with an ITIN: ITIN mortgage.
- You live outside the U.S.: foreign national mortgage.
New to the term? Start with what a non-QM loan is.
What to expect on cost
Non-QM loans are typically priced above conventional loans and often need 10% to 25% or more down, plus reserves. If your tax returns already show enough income, a conventional loan is usually cheaper. As both a lender and a broker, I can price both and show you the difference in writing.
Own already? Use equity instead
If you only need cash and like your current mortgage rate, refinancing the whole loan may cost more than it saves. The same documentation types work for home equity lines of credit: see the self-employed HELOC guide, or run numbers in the HELOC calculator.
FAQ
What is a non-QM loan?
A mortgage that falls outside the qualified mortgage documentation rules. It still requires proof that you can repay, but accepts alternatives such as bank statements, a P&L, 1099s, assets or rental income instead of tax returns.
Are non-QM loans more expensive?
Usually. Non-QM loans are typically priced above conventional loans and often need a larger down payment. If your tax returns show enough income, a conventional loan is usually cheaper.
Which non-QM loan is best for self-employed borrowers?
It depends on how you are paid. Bank statement loans fit owners with strong deposits, P&L loans fit owners with clean books, and 1099 loans fit contractors paid by a few clients.
Can I tap home equity with non-QM documentation instead of refinancing?
Often, yes. Bank statement, P&L, 1099 and asset depletion HELOCs use the same kinds of documents and leave your first mortgage in place.
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Keep reading
What Is a Non-QM Loan?
How non-QM mortgages work.
Bank Statement vs. P&L vs. 1099
One example, three ways.
DSCR Loan Requirements
Ratio, down payment and reserves.