If you don’t qualify for a traditional mortgage, you’re not alone. Many qualified borrowers have substantial income, assets, or investment strategies that don’t align with conventional lending guidelines.
That’s where non-QM (nonqualified mortgage) loans come in.
This blog explains the most common non-QM loan options, who each is best for, and how to choose the right solution — including Bank Statement, 1099, DSCR, Asset Depletion, Jumbo, and Credit Event loans.
What Is a Non-QM Loan?
A non-QM loan is a mortgage that allows alternative methods of verifying income or assets. These loans still require proof of ability to repay but offer more flexibility than conventional or government-backed mortgages.
Non-QM loans are often used by:
- Self-employed borrowers
- Independent contractors
- Real estate investors
- High-income borrowers with complex finances
- Borrowers recovering from a recent credit event
Non-QM Loan Options Explained
Bank Statement Loans
Best for self-employed borrowers and business owners
Bank Statement Loans allow borrowers to qualify with 12 or 24 months of personal or business bank statements rather than tax returns.
Ideal if you:
- Own a business
- Are self-employed
- Have significant tax write-offs
- Show strong cash flow but lower taxable income
1099 Loans
Best for independent contractors and gig workers
1099 loans are designed for borrowers who receive 1099 income rather than W-2 wages. Qualification is based on consistent contract income rather than traditional employment documentation.
Ideal if you:
- Work as an independent contractor
- Are paid via 1099
- Have stable earnings but no W-2s
DSCR Loans (Debt Service Coverage Ratio)
Best for real estate investors
DSCR loans qualify borrowers based on the property’s rental income, not personal income. If the property’s rental income covers the mortgage payment, borrowers may be eligible.
Ideal if you:
- Own or are purchasing an investment property
- Want to qualify without using personal income
- Invest in long-term or short-term rentals
Asset Depletion Loans
Best for asset-rich borrowers
Asset Depletion Loans allow borrowers to qualify based on liquid assets, such as bank accounts, investment portfolios, or retirement funds, rather than employment income.
Ideal if you:
- Have significant savings or investments
- Are retired or semi-retired
- Prefer not to document income
Jumbo Non-QM Loans
Best for high-balance or luxury home purchases
Jumbo non-QM loans are designed for borrowers seeking loan amounts above conventional limits who don’t meet traditional income documentation requirements.
Ideal if you:
- Are you purchasing a high-value home
- Have complex income sources
- Need flexible underwriting for a large loan amount
Credit Event Loans
Best for borrowers recovering from financial hardship
Credit Event Loans are designed for borrowers who’ve experienced a recent bankruptcy, foreclosure, short sale, or other major credit event and are now financially stable.
Ideal if you:
- Have re-established credit
- Have substantial current income or assets for sizable down payment
- Don’t want to wait years for conventional eligibility
Non-QM Loan Comparison Chart
| Loan Type | Income Documentation | Best For | Tax Returns Required | Primary Qualification |
|---|---|---|---|---|
| Bank Statement Loan | 12–24 months bank statements | Self-employed borrowers | No | Deposit cash flow |
| 1099 Loan | 1099 income forms | Independent contractors | No | Consistent contract income |
| DSCR Loan | Rental income only | Real estate investors | No | Property cash flow |
| Asset Depletion Loan | Liquid assets | Asset-rich borrowers | No | Asset reserves |
| Jumbo Non-QM Loan | Varies | High-balance buyers | Sometimes | Income, assets, or cash flow |
| Credit Event Loan | Alternative documentation | Recent credit recovery | Sometimes | Overall financial profile |
How to Choose the Right Non-QM Loan
- Self-employed or business owner → Bank Statement Loan
- Independent contractor → 1099 Loan
- Investor → DSCR Loan
- Asset-rich → Asset Depletion Loan
- High-value purchase → Jumbo Non-QM Loan
- Past credit challenges → Credit Event Loan
The best non-QM loan depends on how you earn, hold, or deploy your money — not just what your tax returns say.
Final Thoughts
Non-QM loans offer flexible options for borrowers whose financial profiles don’t meet traditional lending criteria. Understanding how each loan works makes it easier to choose the mortgage that aligns with your goals.
North American Savings Bank offers a range of non-QM loan options tailored to self-employed borrowers, real estate investors, and high-net-worth clients with complex financial profiles. If you have questions, call the NASB experts at 855-284-7695.
*Not all products are available for collateral located in all states or for all amounts.
