Also written as:
Non-QM
A mortgage that doesn't meet the Consumer Financial Protection Bureau's Qualified Mortgage standards. Lets lenders use alternative income documentation — bank statements, asset depletion, etc.
Non-QM stands for "Non-Qualified Mortgage." These are loans that don't fit within the Consumer Financial Protection Bureau's Qualified Mortgage rules — a set of underwriting standards that gave lenders legal safe harbor after the 2008 housing crisis.
Most Non-QM loans exist to serve borrowers whose income is hard to document in traditional ways: self-employed borrowers, real estate investors, retirees living off assets, gig workers. Common Non-QM products include bank statement loans (income proven by deposits, not tax returns), asset depletion loans (qualifying based on retirement/investment account balances), and DSCR loans (for investors, qualifying based on the rental income of the property).
Rates are usually 0.5–1.5% higher than conforming loans, and down payments are often larger (15–25%).
Example
A self-employed contractor shows $250K/year in business gross revenue but only $90K on personal tax returns (after deductions). A traditional lender qualifies them based on $90K. A bank-statement Non-QM lender averages 12 months of business deposits and qualifies them on $200K of usable income.
Also known as
Non-QM, bank statement loan, alternative documentation loan, alt-doc loan