Non-QM Loan FAQs

At North American Savings Bank (NASB), a bank-statement loan is a mortgage that verifies income using bank statements instead of tax returns or W‑2s. Usually, a bank-statement mortgage allows self‑employed borrowers to qualify based on cash flow from deposits rather than taxable net income.

This option helps entrepreneurs and freelancers who claim legitimate write-offs while still demonstrating their ability to repay.

NASB’s Bank Statement Loan is designed for self-employed borrowers whose reported taxable income understates their actual earnings due to business deductions. These loans are typically ideal for small business owners, independent contractors, gig workers, and 1099 earners with consistent deposits.

If your deposits are steady but your adjusted gross income is low, this program might be a better fit than traditional underwriting.

NASB determines qualifying income by averaging deposits over 12 or 24 months and applying an expense factor—either standard or CPA-verified—to evaluate cash flow. Generally, lenders calculate a monthly average of verifiable deposits and deduct typical business expenses to determine qualifying income.

This emphasizes actual revenue trends instead of tax return net income.

NASB typically requires 12 consecutive months of bank statements from the same account; if the file improves, it may review 24 months of statements. Generally, bank statement programs require 12–24 months to stabilize and account for seasonal changes.

Your loan officer might recommend a 24-month term if deposits fluctuate seasonally.

NASB usually requires a minimum credit score of 700 for its Bank Statement Loan program. Across the market, alternative documentation mortgages often need higher credit scores than some traditional programs.

Higher scores can help secure better pricing and terms.

NASB offers bank statement loans with down payments as low as 10% when mortgage insurance is required, up to a maximum LTV of 90%. Generally, bank statement mortgages usually need a 10–20% down payment, depending on creditworthiness, loan amount, and risk factors.

Your specific requirement depends on file size and program settings.

NASB’s rates for bank statement loans are usually higher than conventional mortgages but remain competitive among non-QM options. Generally, alternative documentation loans are priced based on risk and complexity, so their rates tend to be higher than those of standard conforming mortgages.

Pricing considers credit, deposits, loan amount, property, and reserves.

The NASB generally requires a government-issued ID, a credit report, documentation of assets or reserves, and proof of business activity such as a business license or CPA letter. Typically, lenders request identity, credit, asset, and business verification to assess stability and repayment capacity.

Your checklist will be tailored to your scenario to keep underwriting efficient.

NASB offers bank statement loans for both home purchases and refinances, subject to eligibility and guidelines. In general, alternative documentation mortgages can be used for purchase or refinance when income can be verified through statements.

We’ll help you compare scenarios based on your goals and equity considerations.

• The last 12 months of 1099-NEC income
• Documentation of year-to-date income
• 700 minimum credit score
• 100% of 1099-NEC income considered

To be eligible for this program, you must secure a minimum loan amount of $175,000. Exceptions include mortgage products for properties located within the Greater Kansas City metropolitan area and its surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.

Self-employed individuals who receive income through 1099 forms. Freelancers, contractors, business owners, and individuals who do not receive a regular W-2 paycheck. Borrowers with at least two years of stable 1099 income are often required to qualify, although some lenders like NASB may accept one year. The borrower’s income will be evaluated by reviewing tax returns, bank statements, and profit and loss (P&L) statements.

1099 forms: The actual 1099 tax forms for the last 1-2 years.

Tax returns: Two years of tax returns (including all schedules) are typically required. Lenders usually want to see Schedule C (profit or loss from a business) and Schedule E (rental income) to assess your business or freelance income.

Bank statements: Lenders will also request recent bank statements (usually 2-3 months) to evaluate your cash flow and deposits.

Profit and Loss statement (P&L): Some lenders may request a P&L statement or balance sheet to assess your business's income and expenses.

Credit report: Lenders will check your credit score to determine your loan eligibility.

Lenders typically calculate your net income (after business expenses) from your tax returns. They look at your adjusted gross income (AGI) from your tax return. Write-offs (deductions) that reduce your taxable income may lower the income the lender considers for loan approval. For example, writing off a lot of business expenses could reduce your income on paper, making it harder to qualify for a larger loan. Some lenders may use gross income (before deductions) if it provides a better estimate of your actual earning capacity.

Down payments for 1099 mortgage loans are typically higher than those for traditional loans; the minimum is 20% down. The required down payment can vary based on factors like your credit score, the type of loan, and the lender’s policies.

Interest rates for 1099 mortgage loans can be slightly higher than conventional mortgages, especially if the lender views your income as more complex to verify or if you have a non-traditional source of income. Rates will vary depending on your credit score, loan amount, down payment, and other financial factors.

Yes, 1099 mortgage loans are available for various property types, including:

• Primary residences
• Second homes
• Investment properties

However, loan terms may vary depending on the property type, and investment properties may require larger down payments.

The required credit score varies by lender but typically is at least 700. The stronger your credit score, the better your chances of qualifying and receiving favorable loan terms. If your credit score is lower, you might still qualify but could face higher interest rates or more stringent conditions.

You can use a 1099 mortgage loan to purchase second homes or investment properties. However, the down payment for investment properties may be higher, and interest rates might be slightly higher than primary residence loans.

Income verification: A traditional mortgage requires W-2 forms for salaried employees, while a 1099 mortgage loan uses 1099 forms and tax returns to assess income for self-employed individuals.

Documentation: The documentation is typically straightforward for traditional mortgages, but 1099 mortgages may require more detailed records of income and business activity (e.g., P&L statements).

Approval criteria: Traditional loans may have stricter income verification, while 1099 loans offer more flexibility for self-employed borrowers.

Lenders typically prefer at least two years of self-employment to demonstrate stability. However, some lenders may accept one year of self-employment or use alternative documentation (like recent business contracts or bank statements) to assess income stability. Qualifying may be more challenging if you’ve been self-employed for less than a year, but it's not impossible with the correct documentation.

Several programs are available for self-employed individuals, including DSCR (Debt Service Coverage Ratio) loans, which evaluate rental income and cash flow rather than just taxable income. Some lenders may also offer stated income or bank statement loans for borrowers struggling to prove income with traditional tax returns.

A DSCR loan is a type of non-QM loan used in real estate investing. The loan eligibility depends on the property’s income potential, not the borrower’s income. The Debt Service Coverage Ratio (DSCR) helps determine if a property makes enough money to pay its debts.

It's actually very simple to qualify for a DSCR loan. The property must generate enough rental income to offset the mortgage payment plus other expenses associated with the investment property. The minimum debt service coverage ratio required is between 1.1x and 1.2x, which means the property must produce between 10% and 20% net positive cash flow after all expenses have been deducted. A minimum loan amount of $175,000 and a 700 FICO score is also required.

To calculate the debt service coverage ratio (DSCR), divide the property's profit generated after deducting operating expenses or net operating income (NOI) by its total debt service, which refers to the annual loan payments. A DSCR of 1.0 indicates that the property's income is sufficient to meet its debt obligations. A DSCR above 1.0 suggests positive cash flow, while a ratio below 1.0 indicates negative cash flow.

Lenders usually want a DSCR of 1.2 or more. This means the property makes 20% more money than needed for debt payments. However, some lenders may accept a lower DSCR depending on the property type and the risk involved.

No. Unlike traditional loans, DSCR loans focus on the property’s ability to generate income. Your personal income and credit score are not as important. However, some lenders may still ask for this information during application.

Yes. DSCR loans are made for real estate investors. They help finance rental properties, commercial properties, and other income-generating assets.

Yes. DSCR loans can be used for residential and commercial properties if the property generates income. However, the specific DSCR requirements may vary based on the property type.

The down payment needed can change. It usually falls between 20% and 30%, depending on the lender, property type, and DSCR. A higher DSCR may allow you to secure a lower down payment.

DSCR loans are typically for income-generating properties that are not in need of major repairs and are less commonly used for flips. However, if the property has the potential for long-term rental income, a DSCR loan may still be an option.

Yes. If tenants already occupy the property, you can boost the DSCR. This makes it easier to qualify for a loan.

The main benefit of a DSCR loan is that it helps real estate investors qualify for a loan. This analysis focuses on the property’s income potential, not on the investor's personal finances, making financing easier for investors with low personal incomes.

Traditional loans usually need a borrower's credit score, income, and other details. In contrast, DSCR loans focus on the income the property makes. DSCR loans are typically more flexible for real estate investors.

The approval process can change based on the lender and the loan's complexity. Usually, the approval and funding process takes 30 to 60 days.

Lenders consider DSCR loans at a higher risk, so they can set higher interest rates than traditional loans. The rate will depend on factors such as the DSCR, the property type, and the loan amount.

Yes, you can refinance a property with a DSCR loan. The property must make enough income to meet the DSCR requirements. A refinance may allow you to access better terms or pull equity from the property.

The main qualifying factors for securing an investment property loan are:

• Employment history: You must show proof of verified employment for a minimum of two years.
• Credit score: Your credit score will determine your down payment, rate, and ability to be approved. Most lenders require a minimum credit score of 620 to qualify, and a credit score of 720 or higher will get you the best rates.
• Debt to Income ratio (DTI): Your DTI is determined by dividing your gross monthly income by your total monthly debts. A DTI of 36% or less is ideal; anything above 50% may prevent you from qualifying.
• Down payment: You should be prepared to put down 20%-25% of the purchase price for an investment property loan. 

The three types of investment properties are:

• Residential: The most common form of investment property, these properties are purchased to rent out to tenants and earn monthly rentals. These can include single-family homes, apartments, condominiums, or townhomes.
• Commercial: These are properties purchased for business purposes, such as office space, retail stores, restaurants, etc. The investor may purchase an already existing property or develop from the ground up.
• Mixed-use: These properties can be used simultaneously for residential and commercial purposes. For instance, the ground level may be used for retail shops and the upper floors for residential units.

A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.

Portfolio loan lenders like NASB will dig deep to find out about what caused your economic issues and what you’ve done to recover from it. This allows borrowers with blemishes on their financial history to have a chance at owning a home. Other situations that make a portfolio loan a good option include:

• Self-employed borrowers.
• Foreign nationals.
• Borrowers with high income, low credit.
• Borrowers without documented income but high net worth.

Because portfolio loans do not have to meet GSE (Government-Sponsored Enterprise) guidelines, the requirements for portfolio loans vary from lender to lender. The lender is assuming the risk, so they set the qualifications. Generally, if a borrower can show they have the ability to pay back the loan, can make a down payment, and has a FICO score and debt-to-income ratio above a certain threshold, they may qualify for a portfolio loan.

A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.

• It makes cash available, so you get the home you want without waiting to sell or needing a sale contingency.
• It puts odds in your favor in a competitive market.
• If you don’t have cash for a down payment.
• Interest-only payments until your home is sold.

• May have to pay for an appraisal, along with associated closing costs and fees.
• Might own two homes with two mortgage payments for a while.
• Higher interest rates than conventional loans.
• Lenders usually require at least 20% home equity.

A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.

There are a number of factors that can contribute to a condo being tagged as non-warrantable, including:

• Ownership requires a membership, like a golf club.
• The project is new construction and not completed yet.
• One person or entity owns more than 10% of the total number of units.
• The condo allows for the majority of the units to be rentals and/or short-term rental units.
• The condo developer hasn’t ceded control of the owner’s association yet.
• More than 25% of the units in development will be used commercially.
• There is litigation of any kind tied to the project.

Non-warrantable condo loan requirements include:

• A minimum credit score of 680
• Last two years of verifiable income, including W-2s and tax returns
• A debt-to-income ratio (DTI) of no more than 45%
• Different rate and term options are presented
• Points and fees cannot exceed 3% of the loan amount

A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.