Non-QM Mortgage for Self-Employed 2026: Bank Statement Loans Complete Guide
💼 Self-Employed? Tax Write-Offs Killing Your Mortgage Approval?
Non-QM (Non-Qualified Mortgage) loans let self-employed borrowers qualify using bank statements instead of tax returns. Perfect for entrepreneurs who write off business expenses.
- ✓ No Tax Returns: Use 12-24 months bank statements
- ✓ Higher Income Recognition: Lenders count deposits, not taxable income
- ✓ Flexible Documentation: 1099s, profit/loss statements accepted
- ✓ Fast Approval: 30-45 days vs 60+ for conventional
✓ Bank statement loans ✓ No tax returns ✓ Self-employed specialists
If you're self-employed, you know the struggle: you write off business expenses to reduce taxes, but this tanks your "qualifying income" for mortgages. Non-QM loans solve this problem by using bank statements to prove income instead of tax returns.
🔍 What Is a Non-QM Mortgage?
Non-QM vs Conventional Loans
| Feature | Conventional | Non-QM |
|---|---|---|
| Income Verification | Tax returns (2 years) | Bank statements (12-24 months) |
| DTI Limit | 43-50% | Up to 55% |
| Credit Score | 620+ (620-640 difficult) | 600+ (more flexible) |
| Down Payment | 3-20% | 10-20% |
| Interest Rate | 6.25-6.75% | 7.00-8.50% |
| Best For | W-2 employees | Self-employed, 1099, gig workers |
💡 Key Difference:
Conventional loans use taxable income (after write-offs). Non-QM uses gross deposits (before write-offs). This can increase qualifying income by 30-50%!
📊 Real Example: Why Non-QM Works for Self-Employed
Meet Sarah - Freelance Graphic Designer
Gross Revenue: $180,000/year
Business Expenses: $90,000 (software, equipment, home office, travel)
Taxable Income: $90,000 (after write-offs)
❌ Conventional Loan
Qualifying Income: $90,000
Max Loan (43% DTI): $270,000
Can't afford $400K home
✅ Non-QM Loan
Qualifying Income: $144,000 (80% of deposits)
Max Loan (50% DTI): $432,000
Can afford $400K home!
✅ Who Qualifies for Non-QM Loans?
Perfect Candidates
- ✓ Self-Employed: Business owners, sole proprietors, LLCs
- ✓ 1099 Contractors: Freelancers, consultants, gig workers
- ✓ Real Estate Investors: Multiple properties, rental income
- ✓ High Net Worth: Significant assets, complex income
- ✓ Recent Business Start: Less than 2 years in business
- ✓ Foreign Nationals: Non-US citizens with US income
Minimum Requirements (2026)
- → Credit Score: 600+ (640+ for best rates)
- → Down Payment: 10-20% (20% = better rates)
- → Bank Statements: 12-24 months business/personal
- → DTI Ratio: Up to 50-55% (varies by lender)
- → Reserves: 6-12 months PITI in savings
- → Property: Primary residence, second home, or investment
📋 How Bank Statement Loans Work
Income Calculation Methods
Method 1: Gross Deposits (Most Common)
Lender adds up all deposits, multiplies by 50-80% to account for business expenses.
Example:
Total deposits (12 months): $180,000
Expense factor: 80% (lender assumes 20% expenses)
Qualifying income: $180,000 × 80% = $144,000/year
Method 2: Net Deposits (Conservative)
Lender subtracts business expenses from deposits to get net income.
Example:
Total deposits: $180,000
Documented expenses: $60,000
Qualifying income: $180,000 - $60,000 = $120,000/year
Method 3: CPA Letter (Hybrid)
CPA analyzes statements, provides letter stating qualifying income.
Example:
CPA reviews 24 months statements
CPA letter states: $150,000/year qualifying income
Lender uses CPA's calculation
📄 Required Documentation
Core Documents
- ✓ Bank Statements: 12-24 months business + personal accounts
- ✓ Credit Report: Lender pulls (aim for 640+)
- ✓ Photo ID: Driver's license or passport
- ✓ Proof of Business: Business license, DBA, or LLC docs
- ✓ Asset Statements: 6-12 months reserves (savings, investments)
Optional (Strengthens Application)
- → CPA Letter: Verifies income calculation
- → Profit & Loss: Year-to-date P&L statement
- → 1099s: Shows client relationships
- → Contracts: Ongoing client agreements
- → Business Tax Returns: If available (not required)
💰 Non-QM Loan Costs (2026)
What to Expect
| Cost Item | Conventional | Non-QM |
|---|---|---|
| Interest Rate | 6.25-6.75% | 7.00-8.50% |
| Down Payment | 3-20% | 10-20% |
| Origination Fee | 0-1% | 1-3% |
| PMI | $200-400/mo (if <20% down) | $0 (no PMI) |
| Closing Costs | 2-5% | 3-6% |
💰 Cost Example ($400K Home):
Down payment (15%): $60,000
Loan amount: $340,000
Rate: 7.50%
Monthly payment: $2,377
Origination fee (2%): $6,800
Total closing costs: $18,000-24,000
🎯 How to Get Approved
Find Non-QM Specialist Lender
Not all lenders offer Non-QM. Get Non-QM loan from Truss Financial who specialize in self-employed borrowers.
Organize Bank Statements
Gather 12-24 months statements. Highlight business deposits. Remove non-income deposits (transfers, loans).
Boost Credit Score to 640+
Pay down credit cards below 30% utilization. Dispute errors. Avoid new credit inquiries.
Build Cash Reserves
Save 6-12 months PITI (principal, interest, taxes, insurance). Shows financial stability.
Get Pre-Approved
Submit application with bank statements. Lender calculates qualifying income. Receive pre-approval letter (30-45 days).
💼 Ready to Get Approved?
Get pre-approved with bank statement loan specialists!
Get Non-QM Loan Quote →❓ Common Questions
Do I need tax returns for Non-QM loans?
No! That's the whole point. Non-QM uses 12-24 months bank statements instead of tax returns. Perfect for self-employed who write off expenses.
Are Non-QM rates higher than conventional?
Yes. Non-QM rates are 0.75-2.00% higher (7.00-8.50% vs 6.25-6.75%). But you can refinance to conventional once you have 2 years tax returns showing higher income.
Can I use Non-QM for investment property?
Yes! Non-QM works for primary residence, second home, AND investment properties. Great for real estate investors with multiple properties.
How long does Non-QM approval take?
Typically 30-45 days from application to closing. Faster than conventional (60+ days) because less documentation required.
Can I refinance Non-QM to conventional later?
Absolutely! Once you have 2 years tax returns showing higher income, refinance to conventional for lower rate. Many borrowers do this after 2-3 years.
🎯 Key Takeaways
✅ Pros
- → No tax returns needed
- → Higher income recognition (30-50% more)
- → Flexible documentation
- → Fast approval (30-45 days)
- → No PMI required
⚠️ Cons
- → Higher rates (7.00-8.50%)
- → Larger down payment (10-20%)
- → Higher origination fees (1-3%)
- → Need 6-12 months reserves
- → Not all lenders offer
💪 Bottom Line
Non-QM loans are a game-changer for self-employed borrowers. Yes, rates are higher, but you can actually GET APPROVED. Once you have 2 years tax returns, refinance to conventional for lower rate. Don't let tax write-offs prevent homeownership!
Apply with Truss Financial →