Non-QM Mortgage 2026: Complete Guide to Non-Qualified Mortgages
Everything you need to know about non-QM mortgages in 2026: What they are, who qualifies, rates, lenders, and how to get approved for alternative mortgage financing.
🎯 Non-QM Mortgage Quick Facts 2026
💰 Down Payment:
- • Primary home: 10-20%
- • Investment: 15-25%
- • Foreign national: 20-30%
- • Recent credit event: 20-35%
📈 Interest Rates:
- • Bank statement: 7.5-9%
- • DSCR: 7.5-9.5%
- • Asset depletion: 8-10%
- • Foreign national: 8.5-11%
📋 Credit Score:
- • Minimum: 580-660
- • Standard: 660-700
- • Best rates: 720+
✅ Best For:
- • Self-employed
- • Real estate investors
- • Recent credit events
- • Foreign nationals
🏆 Compare Non-QM Mortgage Lenders (Free Quotes)
Get personalized non-QM loan quotes from specialty lenders. Compare rates, terms, and approval requirements in minutes.
Compare Non-QM Lenders →What Is a Non-QM Mortgage? (And Why You Might Need One)
A non-QM mortgage (non-qualified mortgage) is a home loan that doesn't meet the Consumer Financial Protection Bureau's (CFPB) "qualified mortgage" (QM) standards. These standards were created after the 2008 financial crisis to protect borrowers from risky loans.
Qualified Mortgage (QM) Requirements:
- Debt-to-income ratio (DTI) ≤ 43%
- Documented W-2 income with tax returns
- No negative amortization or interest-only payments
- Loan term ≤ 30 years
- Points and fees ≤ 3% of loan amount
Non-QM mortgages don't follow these rules. They offer flexible underwriting for borrowers who don't fit the traditional lending box:
- ✅ Self-employed borrowers who can't provide W-2s or traditional pay stubs. If you have strong bank deposits but irregular income documentation, this is your loan. Get a bank statement loan quote →
- ✅ Real estate investors with multiple properties
- ✅ Recent credit events (bankruptcy, foreclosure, short sale)
- ✅ Foreign nationals without US credit history
- ✅ High net worth individuals with complex income
- ✅ Anyone with non-traditional income (1099, gig economy, rental income)
💡 Key Point: Non-QM ≠ Subprime. Non-QM loans are NOT the risky "subprime" loans that caused the 2008 crisis. They're simply alternative mortgages with flexible documentation. Most non-QM borrowers have good credit (660-740+) and substantial down payments (20-30%).
6 Types of Non-QM Mortgages (And Who They're For)
1. Bank Statement Loan (Best for Self-Employed)
What it is: Qualify using 12-24 months of bank statements instead of tax returns. Lenders analyze deposits to calculate income.
Bank Statement Loan Details:
- • Down payment: 10-20% (primary), 15-25% (investment)
- • Credit score: 620-660 minimum
- • Interest rate: 7.5-9%
- • Documentation: 12-24 months bank statements
- • Best for: Self-employed, 1099 contractors, business owners
How income is calculated: Lenders average your monthly deposits over 12-24 months, then apply an "expense ratio" (typically 50-75% depending on your business type). Example: $10,000/month average deposits × 50% expense ratio = $5,000/month qualifying income.
Why it works: Self-employed borrowers often write off expenses on tax returns, showing low taxable income. Bank statements reveal your TRUE cash flow. Read our self-employed mortgage guide →
2. DSCR Loan (Best for Real Estate Investors)
What it is: Qualify based on the property's rental income, not your personal income. DSCR = Debt Service Coverage Ratio (rental income ÷ mortgage payment).
DSCR Loan Details:
- • Down payment: 15-25%
- • Credit score: 640-680 minimum
- • Interest rate: 7.5-9.5%
- • DSCR requirement: 1.0+ (rental income covers mortgage)
- • Best for: Real estate investors, rental property owners
Example: Property rents for $2,500/month. Mortgage payment (PITI) = $2,000/month. DSCR = $2,500 ÷ $2,000 = 1.25 ✅ (approved). Lenders prefer DSCR ≥ 1.0 (some accept 0.75-1.0 with higher down payment).
Why it works: No income verification needed. Perfect for investors with multiple properties or those who don't want to show personal income. Best for: Real estate investors buying rental properties. DSCR loans don't require personal income verification—approval is based solely on the property's rental income potential. Compare DSCR loan lenders →
3. Asset Depletion Loan (Best for High Net Worth)
What it is: Qualify using liquid assets (cash, stocks, bonds, retirement accounts) instead of income. Lenders "deplete" assets over the loan term to calculate qualifying income.
Asset Depletion Loan Details:
- • Down payment: 20-30%
- • Credit score: 680-700 minimum
- • Interest rate: 8-10%
- • Assets required: $500K-$2M+ in liquid assets
- • Best for: Retirees, high net worth, early retirees
Example: You have $1M in liquid assets. Lender divides by 360 months (30-year loan): $1M ÷ 360 = $2,778/month qualifying income. Some lenders use 60-70% of assets (to account for market volatility).
Why it works: Perfect for retirees or early retirees with substantial savings but no W-2 income. Best for: High net worth individuals with significant assets (stocks, bonds, retirement accounts) but low reported income. If you have $500K+ in liquid assets, you can qualify based on asset depletion. Get pre-approved with assets →
4. Foreign National Loan (Best for Non-US Citizens)
What it is: Mortgages for non-US citizens without US credit history or Social Security numbers. Uses foreign credit, income, and assets.
Foreign National Loan Details:
- • Down payment: 20-30% (some require 40%)
- • Credit score: 660-700 (foreign credit report)
- • Interest rate: 8.5-11%
- • Visa required: Work visa, investor visa, or valid US visa
- • Best for: Foreign nationals, expats, international investors
Why it works: Allows non-US citizens to buy US real estate without US credit history. Popular with Chinese, Canadian, Mexican, and European buyers.
5. Recent Credit Event Loan (Post-Bankruptcy/Foreclosure)
What it is: Mortgages for borrowers with recent credit events (bankruptcy, foreclosure, short sale, deed-in-lieu) who don't meet conventional waiting periods.
Recent Credit Event Loan Details:
- • Down payment: 20-35%
- • Credit score: 580-620 (post-event)
- • Interest rate: 8.5-11%
- • Waiting period: 1 day to 2 years (vs 2-7 years conventional)
- • Best for: Post-bankruptcy, post-foreclosure, post-short sale
Conventional waiting periods: Bankruptcy 2-4 years, Foreclosure 3-7 years, Short sale 2-4 years. Non-QM lenders accept borrowers 1 day after discharge/completion with 25-35% down.
6. Interest-Only Loan (Cash Flow Optimization)
What it is: Pay only interest for 5-10 years, then convert to principal + interest. Lowers monthly payments during interest-only period.
Interest-Only Loan Details:
- • Down payment: 20-30%
- • Credit score: 700+ minimum
- • Interest rate: 7.5-9.5%
- • Interest-only period: 5-10 years
- • Best for: High earners, investors, cash flow optimization
Example: $500K loan at 8% interest. Interest-only payment = $3,333/month (vs $3,668 with principal). After 10 years, payment jumps to $4,500+/month (principal + interest over remaining 20 years).
Why it works: Maximizes cash flow for investments or business growth. Popular with real estate investors and high-income professionals.
🏡 Get Pre-Approved for a Non-QM Loan (Free)
See which non-QM loan type works best for your situation. Get pre-approved in minutes from specialty lenders.
Get Pre-Approved Now →Non-QM Mortgage Requirements 2026
1. Down Payment (10-35%)
| Property Type | Down Payment | Example ($500K Home) |
|---|---|---|
| Primary Residence | 10-20% | $50,000-$100,000 |
| Second Home | 15-25% | $75,000-$125,000 |
| Investment Property | 15-25% | $75,000-$125,000 |
| Foreign National | 20-30% | $100,000-$150,000 |
| Recent Credit Event | 20-35% | $100,000-$175,000 |
2. Credit Score (580-720+)
Credit score requirements by loan type:
- 580-619: Recent credit event loans (25-35% down, 9-11% rates)
- 620-659: Bank statement loans (20-25% down, 8-9% rates)
- 640-679: DSCR loans (15-20% down, 7.5-8.5% rates)
- 660-699: Foreign national loans (20-30% down, 8.5-10% rates)
- 680-719: Asset depletion loans (20-25% down, 8-9% rates)
- 720+: Best rates on all non-QM loans (10-20% down, 7.5-8.5% rates)
3. Documentation Requirements
What you'll need to provide:
Bank Statement Loan:
- • 12-24 months personal/business bank statements
- • Proof of business ownership (if applicable)
- • Credit report
- • Proof of down payment funds
DSCR Loan:
- • Lease agreement or rental appraisal
- • Property insurance quote
- • Credit report
- • NO income verification required
Asset Depletion Loan:
- • 2-3 months statements for all accounts
- • Proof of liquid assets ($500K-$2M+)
- • Credit report
- • NO income verification required
Non-QM Mortgage Rates 2026: What to Expect
Non-QM rates are 1-3% higher than conventional mortgages due to increased risk. Here's what you can expect in 2026:
| Loan Type | Interest Rate Range | vs Conventional |
|---|---|---|
| Bank Statement | 7.5-9% | +1-2% |
| DSCR | 7.5-9.5% | +1-2.5% |
| Asset Depletion | 8-10% | +1.5-3% |
| Foreign National | 8.5-11% | +2-4% |
| Recent Credit Event | 8.5-11% | +2-4% |
| Conventional (reference) | 6.5-7.5% | Baseline |
Factors that affect your rate:
- Credit score: 720+ = best rates, below 660 adds 0.5-1.5%
- Down payment: 25-30% = lower rates, 10-15% = higher rates
- Property type: Primary residence = lowest, investment = +0.5-1%
- Loan amount: Jumbo loans ($766K+) may add 0.25-0.5%
- Lender: Shop 3-5 lenders—rates vary by 0.5-1%!
Best Non-QM Mortgage Lenders 2026
Not all lenders offer non-QM loans. Here are the top specialty lenders:
1. Angel Oak Mortgage Solutions
Specialties:
- • Bank statement loans (12-24 months)
- • DSCR loans (no income verification)
- • Asset depletion loans
- • Recent credit event loans (1 day post-BK)
Best for: Self-employed, investors, post-bankruptcy
2. Carrington Mortgage Services
Specialties:
- • Bank statement loans (1099 contractors)
- • Foreign national loans
- • Interest-only loans
- • Jumbo non-QM loans
Best for: Foreign nationals, high net worth, jumbo loans
3. Deephaven Mortgage
Specialties:
- • DSCR loans (0.75+ DSCR accepted)
- • Bank statement loans
- • Asset depletion loans
- • 40-year amortization options
Best for: Real estate investors, portfolio lenders
4. Athas Capital Group
Specialties:
- • Foreign national loans (20% down)
- • Bank statement loans
- • DSCR loans
- • No US credit history required
Best for: Foreign nationals, international investors
5. Acra Lending
Specialties:
- • DSCR loans (no income docs)
- • Bank statement loans
- • Fix-and-flip loans
- • Portfolio loans (10+ properties)
Best for: Real estate investors, fix-and-flip
🎯 Strategy: Work with a mortgage broker who specializes in non-QM loans, shop 3-5 lenders, put down 20-30% if possible, and aim for 720+ credit for best rates. Non-QM rates are higher than conventional (7.5-11% vs 6.5-7.5%), but the flexibility is worth it if you can't qualify for traditional financing. Find a non-QM mortgage broker →
💰 Compare Non-QM Lenders (Free Tool)
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Compare Lenders Now →Non-QM vs Conventional Mortgage: Which Is Better?
| Feature | Non-QM | Conventional |
|---|---|---|
| Down Payment | 10-35% | 3-20% |
| Credit Score | 580-660+ | 620+ |
| Interest Rate | 7.5-11% | 6.5-7.5% |
| Income Docs | Flexible (bank statements, assets, rental income) | W-2, tax returns required |
| DTI Limit | 50-55% (or no DTI) | 43-50% |
| Credit Events | 1 day post-BK/FC | 2-7 years wait |
| Best For | Self-employed, investors, complex income | W-2 employees, standard income |
Bottom line: If you can qualify for a conventional mortgage, do it (lower rates, better terms). But if you're self-employed, an investor, or have non-traditional income, non-QM is your BEST option.
How to Get Approved for a Non-QM Mortgage (Step-by-Step)
Step 1: Identify Your Non-QM Loan Type
Choose based on your situation:
- Self-employed? → Bank statement loan
- Real estate investor? → DSCR loan
- High net worth/retiree? → Asset depletion loan
- Foreign national? → Foreign national loan
- Recent bankruptcy/foreclosure? → Recent credit event loan
Step 2: Check Your Credit Score (580+ Minimum)
Pull your credit report and dispute errors. Target 660+ for best approval odds, 720+ for best rates. Check your non-QM approval odds →
Step 3: Save for Down Payment (20-30% Recommended)
While some non-QM loans accept 10-15% down, putting down 20-30% gets you:
- ✅ Lower interest rates (0.5-1% less)
- ✅ Easier approval
- ✅ No PMI (private mortgage insurance)
- ✅ Lower monthly payments
Step 4: Gather Documentation
Prepare based on your loan type (see documentation requirements above). Most common: 12-24 months bank statements, proof of assets, credit report.
Step 5: Shop 3-5 Non-QM Lenders
Rates vary significantly between lenders (0.5-1.5%). Get quotes from specialty lenders and mortgage brokers. Compare: rate, down payment, fees, prepayment penalties.
Step 6: Get Pre-Approved
Pre-approval takes 3-7 days for non-QM loans (vs 1-3 days for conventional). Lenders will verify your bank statements, assets, and credit.
Step 7: Find Your Property & Close
Once pre-approved, shop for homes with confidence. Non-QM closing takes 30-45 days (similar to conventional loans).
Non-QM Mortgage FAQs
Are non-QM mortgages safe?
Yes! Non-QM ≠ subprime. Non-QM loans have strict underwriting standards, require substantial down payments (10-35%), and target borrowers with good credit (660-740+). They're simply alternative mortgages with flexible documentation.
Can I refinance a non-QM loan later?
Yes! Many borrowers use non-QM as a "bridge loan" to buy now, then refinance to conventional in 1-2 years (once they have W-2 income, better credit, or more equity). Learn about refinancing →
Do non-QM loans have prepayment penalties?
Some do (typically 1-3 years). Always ask about prepayment penalties before signing. If you plan to refinance soon, negotiate a loan with NO prepayment penalty.
Can I use a non-QM loan for investment properties?
Absolutely! DSCR loans are PERFECT for investment properties. No income verification needed—qualify based on rental income alone. Popular with real estate investors buying multiple properties.
What's the maximum loan amount for non-QM?
Most non-QM lenders offer up to $3-5 million (some go higher for jumbo loans). Minimum loan amounts are typically $100K-$150K.
Final Thoughts: Is a Non-QM Mortgage Right for You?
Non-QM mortgages are game-changers for borrowers who don't fit traditional lending boxes. If you're:
- ✅ Self-employed with strong cash flow (but low tax returns)
- ✅ A real estate investor buying rental properties
- ✅ Recovering from bankruptcy/foreclosure
- ✅ A foreign national buying US real estate
- ✅ High net worth with substantial assets (but no W-2 income)
...then a non-QM mortgage is likely your BEST option in 2026.
Best strategy: Work with a mortgage broker who specializes in non-QM loans, shop 3-5 lenders, put down 20-30% if possible, and aim for 720+ credit for best rates. Non-QM rates are higher than conventional (7.5-11% vs 6.5-7.5%), but the flexibility is worth it if you can't qualify for traditional financing.
🚀 Ready to Get Approved for a Non-QM Loan?
Compare non-QM lenders and get pre-approved today. See which loan type works best for your unique situation.
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Michael Thompson is a leading expert in reverse mortgages and senior financing solutions with 15 years of specialized experience. As a certified HECM specialist, he has helped thousands of seniors access their home equity for retirement planning. His compassionate approach and deep knowledge of FHA reverse mortgage guidelines make him a trusted advisor for families navigating senior housing and financial planning decisions.
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