Non-QM loans: a flexible path to homeownership
Non-QM mortgages are flexible loan options designed for people who don’t fit the standard income or credit mold–and it may be the key that finally gets you into a home.
Maybe you’re self-employed and write off a lot of business expenses.
Maybe you freelance, drive for Uber, or have multiple streams of income through a 1099.
Or maybe you’re coming out of a job change–or even a season of unemployment–and just getting back on your feet.
If that’s you, you’re not alone. And you’re not out of options.
While traditional mortgages (also known as “Qualified Mortgages,” or QMs) have strict guidelines for income, employment, and credit, there’s another category worth knowing about: Non-QM mortgages.
In this article, we’ll answer the questions “what are Non-QM mortgages” and explore who they’re for, how they work, and how to find a lender who offers them.
What makes a mortgage ‘Non-QM’ and why it matters
A "Non-QM" mortgage–short for non-qualified mortgage–is simply a mortgage that doesn’t follow the usual checklist set by federal regulators.
These loans aren’t “risky” or “too good to be true.” They’re just a different way to verify a borrower’s ability to repay–especially when traditional documentation doesn’t tell the full story.
Let’s break down how Non-QM loans stack up against traditional mortgages, so you can decide what fits your situation best.
How Non-QM mortgages compare to traditional qualified mortgages:
While Non-QM mortgages help more aspiring homebuyers qualify for financing, they aren’t all the same. Some Non-QM mortgages may have certain restrictions or qualifications that other Non-QMs do not. Below is an overview of a handful of Non-QM mortgages and what you may be able to expect from each.
Qualified Mortgage (QM)
Income Documentation: Requires W-2s, pay stubs, and tax returns.
Debt-to-Income (DTI) Ratio: Capped at 43%.
Credit Requirements: Traditional credit score and history required.
Employment History: Must show stable employment over 2+ years.
Loan Structure: Must meet federal “safe” standards.
Government Backing: Eligible for FHA, VA, and USDA programs.
Flexibility: Not very flexible; must meet tighter guidelines.
Non-Qualified Mortgage (Non-QM)
Income Documentation: Can include bank statements, assets, contracts, or alternative income sources.
Debt-to-Income (DTI) Ratio: Often allows higher DTI with strong compensating factors.
Credit Requirements: May allow alternative credit history or manual underwriting.
Employment History: May accept recent job changes or self-employment.
Loan Structure: Offers more flexible repayment types, like interest-only loans.
Government Backing: Not backed by federal programs.
Flexibility: More flexible for real-world income and life situations.
Why buyers consider Non-QM mortgages
America’s workforce has changed:
26% of Americans earn income independently
Gig work, freelance jobs, and career pivots are common
Traditional mortgages haven’t kept up
That’s where Non-QM loans come in. They work for the way people actually earn and live today. Not the one-size-fits-all system from the past.
Who can benefit from a Non-QM mortgage?
Not everyone checks the same boxes, and that’s exactly why Non-QM mortgages exist. These flexible options make homeownership possible for people in all kinds of situations, including:
Why Non-QM Loans Work for Different Borrower Types
Self-employed borrowers: Can qualify using 12–24 months of bank statements to show cash flow instead of traditional tax returns.
Gig workers and 1099 contractors: Use average monthly deposits rather than relying on inconsistent or seasonal income reported on tax forms.
High-asset, low-income borrowers: May qualify through asset depletion, using investments, savings, or retirement funds to calculate income.
Borrowers with recent job changes: Can be eligible with a strong new income stream, even without a full two-year employment history.
Buyers with credit challenges or no score: May qualify through manual underwriting or alternative credit evaluations, bypassing traditional credit requirements.
Real estate investors: Can qualify based on rental income or property cash flow (DSCR), rather than personal income.
Medical professionals: Tailored programs for doctors, dentists, and specialists with unique or newly established income structures.
ITIN borrowers: Some programs allow qualification using an Individual Taxpayer Identification Number instead of a Social Security Number.
Buyers of non-warrantable condos: Offers financing options for condos that don’t meet conventional loan standards, such as condotels or those with high investor ratios.
In short? If denied for a Conventional loan, a Non-QM might be an alternative path to take a look at.
How can a Non-QM mortgage help me buy a home?
Alternative income documentation
Rather than only looking at W-2s or tax returns to determine how much mortgage you can afford, a Non-QM loan program might consider your bank statements, proof of assets, or even signed contracts to get a clearer picture of your income. That’s a big win for folks who are self-employed, freelance, or earn 1099 income.
Flexibility with employment history
Just started a new job or made a career switch? Most traditional loans want to see a full two years of steady employment but Non-QM loans may be more flexible. If your income is solid and your overall finances check out, you could still qualify without the long work history.
Expanded credit considerations
Non-QM mortgage may allow for manual underwriting or alternative credit evaluation, so if you’ve had past credit challenges or don’t have a long credit history, you may still qualify.
Debt-to-income ratio exceptions
If your DTI is higher than 43%, a Non-QM mortgage could give you more room– especially if your income is expected to rise, or if you have other compensating strengths (like a large down payment or high credit score).
Investment property options
For real estate investors, some Non-QM products use rental income or property cash flow (DSCR) instead of personal income to qualify.
What are the pros and cons of a Non-QM mortgage?
Like any mortgage, it’s important to make sure that a Non-QM loan fits your goals:
Pros of Non-QM Loans
Flexible documentation: Allows alternative income verification methods.
Faster approvals: Especially helpful for borrowers with straightforward cash flow.
Customized underwriting: Offers more room for real-world financial situations.
Access to homeownership: Provides options when traditional loans aren’t available.
Cons of Non-QM Loans
Higher interest rates: Risk-based pricing can result in slightly higher rates.
Larger down payments: Some Non-QM loans may require 10–20% down.
Limited availability: Not all lenders offer Non-QM loan options.
Not eligible for government programs: These loans don’t qualify for FHA, VA, or USDA backing.
Where can I find a Non-QM mortgage lender?
Not every lender offers Non-QM mortgages–but Guild does.
At Guild Mortgage, we understand that real life doesn’t always fit inside a checklist. That’s why we offer options designed for buyers just like you.
Whether you’re self-employed, getting paid in stock, or buying a property that doesn’t check all the traditional boxes, we’ve got options.
Here’s a snapshot of some of Guild’s most popular Non-QM offerings:
Amazon Employee Mortgage: Ideal for new Amazon hires with sign-on bonuses. Allows buyers to use their bonus toward a home purchase.
Bank Statement Mortgage: Designed for self-employed borrowers. Qualify using consistent monthly bank deposits instead of tax returns.
DSCR Mortgage: Great for real estate investors. Qualification is based on the property’s cash flow, not personal income or employment.
Interest-Only Mortgage: Suited for borrowers seeking lower initial payments. Pay interest only at first, with the option to pay more later.
ITIN Mortgage: For borrowers without a Social Security Number. Qualify using an Individual Taxpayer Identification Number (ITIN).
Medical Doctor Options: Tailored for physicians, dentists, and other medical professionals. Offers up to 100% financing and flexibility for new grads or recent hires.
Non-Warrantable Condo Mortgage: Helps buyers purchase unconventional condos (e.g., condotels). Finances units that don’t meet conventional lending standards.
Restricted Stock Units (RSU) Mortgage: Ideal for borrowers compensated with stock. Uses RSUs as qualifying income if consistently granted over two years.
Whether you're navigating a non-traditional income path, starting a new career, or investing in real estate, Guild has a solution built to help.
Final thoughts: Your path to homeownership might look different–and that’s okay
You don’t have to fit the mold to qualify. You just need someone who sees the full picture.
Guild’s loan officers are here to help you find the path that works for your life, not someone else’s.
They’re not loopholes or shortcuts. They’re smart, regulated and tailored for today’s workforce.
So, if you’ve been turned down, discouraged, or just not sure where to start – let’s talk. You may be closer to home than you think.
Reach out and let’s explore your Non-QM options today.
The above information is for educational purposes only. All information, loan programs & interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.