A Non-QM loan — short for Non-Qualified Mortgage — is a fully underwritten mortgage that uses alternative documentation to verify income or qualify the property, instead of the standard tax-return-and-W-2 process. Non-QM is a documentation category, not a risk category. The JD.Mortgage Team writes Non-QM through PRMG’s full platform — Bank Statement, DSCR, 1099 Income, Asset Utilization, Asset Depletion, CPA P&L, Alternative AUS, ITIN, and Foreign National. Loan amounts up to $3.5M on Expanded Prime tiers (Full Doc or Alt Doc), $3M on Alternative AUS, $2.5M on DSCR (CORE and PLUS), $2M on DSCR No Ratio. Credit floors as low as 620 FICO on Non-Prime tiers. Lending in 49 states. Not available in New York.
Mortgages that work the way you actually earn. Bank statements, 1099s, royalties, rental income, or assets — instead of tax returns. Real underwriting, not no-doc.
What Is A Non-QM Loan
A Qualified Mortgage (QM) follows rules set by the Consumer Financial Protection Bureau. Those rules require lenders to verify income through tax returns, W-2s, and pay stubs — and cap debt-to-income ratios at tight levels. Most conventional, FHA, USDA, and VA loans are QM loans.
A Non-QM loan steps outside those rules. The lender still verifies your ability to repay — that requirement never goes away — but the method of verification is different. Instead of tax returns, you might use 12 or 24 months of bank statements, one or two years of 1099 forms, a CPA-prepared profit and loss statement, your investment property’s rental income, or your liquid assets.
Non-QM is not a risk category. It is a documentation category.
Who Non-QM Loans Are Built For
If your income shows up cleanly on a tax return and you fit Fannie Mae’s box, you do not need Non-QM. If it does not — because your write-offs are aggressive, your income comes from platforms or contracts, your wealth is held in assets rather than a paycheck, you earn from a property, or you fall just outside conventional approval — Non-QM is built for you.
Content Creators And Entertainers
YouTube, TikTok, Instagram, Twitch, Substack, Patreon, OnlyFans, brand deals, royalties, residuals, touring, prize money, contract bonuses. Conventional underwriting forces all of that into a tax-return shape that almost never reflects what hits the bank. Non-QM uses the deposits, the 1099s, or the assets directly. The same earner often qualifies for two to three times more loan than a tax-return analysis would allow — because Non-QM looks at income before write-offs eat it.
Self-Employed And Business Owners
If you own a business, your tax returns probably show a fraction of what you earn — because legitimate write-offs reduce taxable income on paper. Bank statement loans look at actual cash deposits over 12 to 24 months. CPA P&L loans use a profit and loss statement covering 12 months. Either way, no tax returns required. Borrowers must be self-employed at least 2 years and the business must be in existence at least 2 years (less than 2 years OK with documented same-line-of-work history).
Real Estate Investors
DSCR loans qualify you on the property’s cash flow, not your personal income. Five program tiers — DSCR at or above 1.00 (rent covers the payment), between 0.75 and 1.00 (slight negative cash flow), and a No Ratio tier for properties with DSCR below 0.75. No W-2, no tax return, no DTI calculation. 1-to-4 unit investment properties. Down to 620 FICO on DSCR PLUS at qualifying tiers; 660 minimum on DSCR No Ratio.
1099 Earners And Independent Contractors
Real estate agents, truck drivers, consultants, voice actors, freelance creatives, and other 1099 earners often qualify for more loan using their 1099 income directly than they would using tax returns. The 1099 program uses 12 or 24 months of 1099 income in place of a full tax-return analysis.
Asset-Rich Borrowers
Retirees, semi-retired earners, between-contract performers and athletes, and high-net-worth borrowers whose wealth lives in retirement and brokerage accounts. Asset Utilization (also called Asset Qualification) and Asset Depletion convert qualifying assets into income — without selling, moving, or pledging anything. Two calculation paths exist: a debt-ratio path that divides net qualifying assets by 84 months, or a total-asset path that requires assets to cover loan amount, down payment, closing costs, reserves, and 5 years of monthly obligations.
ITIN Borrowers
Borrowers using an Individual Taxpayer Identification Number in place of a Social Security number. PRMG’s Non-Prime CORE and PLUS programs include an ITIN option for primary residences and second homes up to 80% LTV.
Borrowers Just Outside Conventional
If you got a refer or caution out of automated underwriting, missed a guideline by a hair, have a slightly higher DTI than conventional allows, or have a recent credit event with tighter seasoning than Fannie wants — the Alternative AUS Solution program runs your file through Desktop Underwriter with limited overlays. Loan amounts $300,000 to $3,000,000, DTIs to 49.99%, 20/25/30-year fixed rate.
The Full Non-QM Program Lineup
There is no single Non-QM product — it is a family of programs, each built for a different income or qualification scenario. Below are the eight programs we run on PRMG’s Non-QM platform.
DSCR Loans
Qualify on the property’s cash flow alone. DSCR — Debt Service Coverage Ratio — measures whether the rent covers the mortgage. Five tiers: CORE and PLUS at 1.00 or above, CORE and PLUS between 0.75 and 1.00, and PLUS No Ratio (DSCR below 0.75) for properties that do not yet cash-flow.
DSCR CORE and PLUS: Loan amounts up to $2.5M. 1-to-4 unit investment properties. FICO from 620 on DSCR PLUS at qualifying tiers, 660 on CORE. 30/40-year fixed and ARM options. Foreign National and First-Time Investor allowed with overlays.
DSCR PLUS No Ratio: Tighter requirements — max $2M loan amount, 660 minimum FICO, 15- or 30-year fixed only (no Interest Only, no ARM).
Bank Statement Loans
12 or 24 months of personal or business bank statements in place of tax returns. The most-used Non-QM program. Captures multi-platform creator income, brand deals, royalty deposits, and self-employed cash flow as it actually lands in the bank. Personal and business documentation cannot be combined on the same loan.
Loan amounts up to $3.5M on Expanded Prime PLUS Alt Doc at 70% LTV with 700+ FICO. FICO from 620 on Non-Prime tiers (43% DTI cap, 75% LTV cap at 620; 660+ unlocks 50% DTI). Primary, second home, investment. 1-to-4 units. Owner-occupied LTV up to 89.99% on Expanded Prime PLUS at 720+ FICO.
1099 Income Loans
12 or 24 months of 1099 income forms in place of tax returns. Captures the gross 1099 income before tax-return write-offs reduce it. Built for contractors, agents, gig workers, and creators paid through 1099 brand deals and platform payouts.
FICO from 620 on Non-Prime tiers. Loan amounts to $3.5M on Expanded Prime Alt Doc. 30/40-year fixed and ARM options.
Asset Utilization / Asset Depletion
Convert liquid assets into a qualifying income stream without selling anything. Available on Expanded Prime CORE and PLUS Full Doc only. Two calculation methods — debt-ratio (net qualifying assets divided by 84 months equals monthly income) or total-asset (assets cover loan, down payment, closing costs, reserves, and 5 years of monthly obligations). Cash-out not allowed. Not allowed on AUS Qualifying.
Allowable assets: 100% of checking/savings/money market, 100% of trust assets when borrower is sole beneficiary, 80% of stocks and bonds, 70% of retirement assets. Business accounts prohibited. 6-month seasoning required. Documentation no more than 30 days old at closing.
CPA P&L Statement Loans
A 12-month CPA-prepared profit and loss statement serves as the income documentation. Two variants — CPA P&L paired with 2 months of bank statements (660 minimum FICO) or CPA P&L without bank statements (720 minimum FICO, available on Expanded Prime CORE/PLUS only). Specific LTV reductions apply per PRMG’s LTV/Occupancy Reduction Grid.
Built for established self-employed borrowers with clean CPA-maintained books. Requires licensed CPA or qualified tax preparer. PTIN required.
Alternative AUS Solution
Bridge program for borrowers very close to conventional approval who got a refer or caution from automated underwriting. Runs through Desktop Underwriter with limited overlays. 20, 25, or 30-year fixed rate (no ARM, no Interest Only).
Loan amounts $300,000 to $3,000,000. Min 661 FICO standard. DTI above 45% requires 700+ FICO and 6 months reserves. Self-employment income requires 720+ FICO. First-time homebuyer max $1,500,000. Max DTI 49.99%. Non-warrantable condos and condotels: LTV must be 10% below max, capped at 70% LTV.
ITIN Loans
Mortgage financing for borrowers using an Individual Taxpayer Identification Number in place of a Social Security number. Available on PRMG’s Non-Prime CORE and PLUS programs with Standard Credit Seasoning.
Primary residence and second home only. Max 80% LTV. Must be priced as ITIN product code.
Foreign National
Mortgage financing for foreign nationals purchasing investment property in the United States. Available on PRMG’s PLUS DSCR program with overlay restrictions per the LTV/Occupancy Reduction Grid.
Investment property only. Subject to LTV and credit reductions per PLUS Foreign National grid.
Match Your Income To The Right Program
The right program depends on which sources of income you want to count and what documentation you can produce. This is the map.
The most common pitfall
Trying to qualify conventionally because someone told you to. Tax returns shred most creator, entertainer, and self-employed files. Schedule C deductions, business expenses, agent and manager fees, touring costs, equipment depreciation, and home-studio write-offs all reduce the income figure conventional underwriting will accept. Non-QM uses the income before those write-offs eat it. The same borrower can qualify for two to three times the loan amount on a Non-QM program versus conventional.
How Non-QM Underwriting Actually Works
Non-QM is fully underwritten. Every program requires income, asset, and credit verification — the difference is what counts as acceptable verification. The same federal ability-to-repay rule that applies to a Fannie Mae loan applies to a Non-QM loan. We are required by law to confirm the borrower can reasonably repay the mortgage. We just use different documents to get there.
PRMG’s Non-QM Tier Structure
All Non-QM programs run through PRMG’s CORE or PLUS platform, with three credit categories. Expanded Prime is the highest credit tier with the strongest pricing and highest LTVs (up to 89.99% for owner-occupied at 740+ FICO). Non-Prime Standard Credit Seasoning handles credit events with full seasoning — 24 months past foreclosure, short sale, deed-in-lieu, Chapter 7, 11, or 13. Non-Prime Recent Credit Seasoning is the most flexible tier, accepting credit events with as little as 12 months seasoning past bankruptcy.
Income Calculation By Program
Bank Statement. 12 months is the standard. 24 months required for seasonal income (landscaping, farming). Personal statements use either a 12-month deposit average or a 1099 gross income calculation. Business statements use one of three options — third-party-prepared P&L, third-party expense statement, or a fixed 50% expense ratio. A 20% expense ratio program is also available on qualifying scenarios.
1099 Income. 12 or 24 months of 1099s. Standard expense factor applied to gross 1099 income.
Asset Utilization (Debt Ratio Method). Borrower must hold the lesser of 1.5x the loan balance OR $500,000 in qualified assets, net of down payment, closing costs, and reserves. Monthly qualifying income equals net qualified assets divided by 84 months.
Asset Depletion (Total Asset Method). Allowable assets must cover the loan amount + down payment + closing costs + required reserves + 5 years of current monthly obligations. No DTI calculation. Income and employment do not have to be disclosed on the 1003.
DSCR. Monthly gross rent divided by monthly PITIA (principal, interest, taxes, insurance, association dues). No personal income input.
Self-Employment History
Borrowers must be self-employed at least 2 years AND the business must be in existence at least 2 years. Less than 2 years can be considered with documentation of at least 2 years employment history in the same line of work or related profession. Less than 1 year is not allowed.
Reserves
3 to 12 months of reserves depending on credit, LTV, occupancy, and loan amount. Lower loan amounts on Expanded Prime require 6 months. Loan amounts $2.5M+ require 9 to 12 months. Non-Prime tiers may run 3 months on smaller loans.
Property Types
Single-family, 2-to-4 unit, condos (warrantable and non-warrantable), townhomes. Investment programs cover 1-to-4 units. Some DSCR scenarios cover short-term rentals using market rent rather than current-lease rent. Hawaii lava zones 1 and 2 are not allowed. Texas Section 50(a)(6) (Texas Home Equity) transactions require 30-year fixed only, 1 unit, max 80% LTV, and full Texas-specific compliance.
Why Non-QM Is Not A Compromise
For the right borrower, Non-QM is not a fallback — it is the correct tool. A bank statement loan that uses your real cash flow gets you into the right house. A DSCR loan that closes off rental income gets you a property that cash-flows. An Asset Depletion loan that uses what you actually own gets you approved when a tax-return-driven file would say no. The conventional path is built around a specific borrower profile. If you do not fit that profile cleanly, conventional is what compromises — not Non-QM.
Non-QM Versus Conventional
Non-QM Myths And Misunderstood Rules
Myth: Non-QM means subprime.
Reality: Non-QM refers to documentation flexibility, not credit quality. Many Non-QM borrowers have excellent credit, strong assets, and low debt — they simply earn income in a way that does not fit a W-2 structure. Today’s Non-QM loans are fully underwritten with full ability-to-repay verification. They are not the no-doc loans of the mid-2000s.
Myth: You need tax returns to qualify for a mortgage.
Reality: Not with Non-QM. Bank statements, 1099 forms, a CPA-prepared P&L, or your assets can all serve as the income documentation. Tax returns are one option — not a requirement.
Myth: Real estate investors need W-2 income to get a mortgage.
Reality: DSCR loans solve this. A DSCR loan qualifies entirely on the property’s cash flow. Your personal income, employment history, and tax returns do not enter the picture. If the rent covers the payment (DSCR ≥1.00), the property qualifies. PRMG also has a No Ratio tier for properties with DSCR below 0.75.
Myth: Non-QM credit scores start at 700+.
Reality: PRMG’s Non-Prime tiers go down to 620 FICO on Bank Statement, 1099, Alt Doc, and DSCR PLUS at qualifying scenarios. 660+ unlocks 50% DTI on Non-Prime Standard. Higher scores unlock better pricing and higher LTVs.
Myth: Non-QM means a smaller loan.
Reality: For self-employed borrowers and creators with legitimate write-offs, Non-QM almost always produces a larger qualifying income figure than conventional. Same business, same money, different documentation lens. The same borrower can qualify for two to three times the loan amount on Non-QM versus conventional, because Non-QM uses income before write-offs.
Non-QM Frequently Asked Questions
Can I get a mortgage without tax returns?
Yes. Several Non-QM programs do not require tax returns. Bank statement loans use 12 or 24 months of deposits. 1099 loans use 12 or 24 months of 1099 forms. Asset utilization and asset depletion use your liquid assets. DSCR loans skip personal income entirely and qualify on the rental property’s cash flow. The right option depends on your income type and documentation available.
What is the lowest credit score for a Non-QM loan?
PRMG’s Non-Prime tiers go down to 620 FICO on Bank Statement, 1099, Alt Doc, and DSCR PLUS at qualifying tiers. At 620, DTI is capped at 43% and LTV is capped at 75%. 660+ unlocks 50% DTI on Non-Prime Standard. Alternative AUS Solution requires a higher 661 minimum. DSCR No Ratio requires a 660 minimum. Higher credit scores unlock better pricing, larger loan amounts, and higher LTVs across all programs.
What is the maximum loan amount on Non-QM?
Up to $3,500,000 on Expanded Prime tiers (Full Doc or Alt Doc) at 70% LTV with 700+ FICO, owner-occupied 1-4 unit. Alternative AUS Solution tops at $3,000,000. DSCR CORE and PLUS top at $2,500,000. DSCR PLUS No Ratio tops at $2,000,000. Specific tier and occupancy combinations can lower these caps.
How do bank statement loans work?
Instead of tax returns, we review 12 or 24 months of your bank statements — personal or business — and use the deposits to calculate qualifying income. Personal statements use a 12-month deposit average or a 1099 gross income calculation. Business statements use one of three expense methods — a CPA-prepared P&L, a CPA expense letter, or a fixed 50% expense ratio. Personal and business statements cannot be combined on the same loan.
What is DSCR and how is it calculated?
DSCR stands for Debt Service Coverage Ratio. It measures whether a property’s rental income covers its mortgage payment. The formula is DSCR equals monthly gross rent divided by monthly PITIA — principal, interest, taxes, insurance, and association dues. PRMG offers five DSCR tiers — CORE and PLUS at 1.00 or above, CORE and PLUS between 0.75 and 1.00, and PLUS No Ratio for properties below 0.75. The No Ratio tier has tighter requirements: max $2M loan, 660 minimum FICO, 15- or 30-year fixed only.
What is asset utilization vs asset depletion?
Both convert your liquid assets into qualification — without selling them. Asset utilization (debt-ratio method) divides net qualifying assets by 84 months to produce a monthly income figure for DTI calculation; borrower must hold the lesser of 1.5x the loan balance or $500,000 in qualified assets. Asset depletion (total-asset method) requires assets to cover the loan amount, down payment, closing costs, reserves, and 5 years of monthly obligations — with no DTI calculation. Allowable assets: 100% of checking/savings/money market, 100% of trust assets when borrower is sole beneficiary, 80% of stocks and bonds, 70% of retirement assets. Business accounts are not allowed. Cash-out is not allowed on either path.
What is a CPA P&L statement loan?
A 12-month CPA-prepared profit and loss statement serves as the income documentation, in place of tax returns or bank statements. Two variants — CPA P&L paired with 2 months of bank statements (660 minimum FICO) or CPA P&L without bank statements (720 minimum FICO, available on Expanded Prime CORE/PLUS only). Specific LTV reductions apply per PRMG’s LTV/Occupancy Reduction Grid. Requires a licensed CPA or qualified tax preparer with PTIN.
What is Alternative AUS Solution?
Alternative AUS Solution is a Non-QM bridge program for borrowers very close to conventional approval who got a refer or caution from automated underwriting. Loan amounts $300,000 to $3,000,000. Min 661 FICO standard, 700+ for DTI above 45% (with 6 months reserves), 720+ when self-employment income is needed for qualification. Max DTI 49.99%. 20, 25, or 30-year fixed only — no ARM, no Interest Only. First-time homebuyer max $1,500,000. Non-warrantable condos and condotels: LTV must be 10% below max, capped at 70% LTV.
Can I use a Non-QM loan for an investment property?
Yes. DSCR loans are built specifically for investment properties using the property’s rental income. Other Non-QM programs — Bank Statement, 1099, Alt Doc — also allow investment properties on 1-to-4 unit buildings. Non-owner-occupied LTVs are typically lower than owner-occupied (75-80% on most tiers).
How long must I be self-employed to qualify?
Two years standard — both self-employment AND business in existence. Less than 2 years can be considered with documentation of at least 2 years employment history in the same line of work or related profession. Less than 1 year is not allowed.
Are Non-QM loans available for ITIN borrowers?
Yes. PRMG’s Non-Prime CORE and PLUS programs include an ITIN product code for borrowers using an Individual Taxpayer Identification Number in place of a Social Security number. Primary residence and second home only. Maximum 80% LTV. Standard credit seasoning required.
Are Non-QM loans safe?
Yes. Today’s Non-QM loans are fully underwritten and held to ability-to-repay standards. We still verify that you can repay the loan. The difference is in how income is documented, not whether it is verified. Non-QM is not a return to the no-documentation loans of the mid-2000s. These are responsible loan products with real underwriting, just built for a different borrower profile.
Can I refinance a Non-QM loan into a conventional loan later?
Yes. Many borrowers use Non-QM as a bridge — they buy or refinance now using bank statements or 1099s, and refinance into conventional later once their tax returns reflect the income they actually earn. Most Non-QM programs have no prepayment penalty, which makes that strategy clean.
Are Non-QM loans available in 49 states?
We are lending in 49 states. Not available in New York. Properties in Hawaii lava zones 1 and 2 are not allowed. Texas Section 50(a)(6) (Texas Home Equity) transactions require 30-year fixed only, 1 unit, max 80% LTV.
Related Resources
Bank Statement Loans
12 or 24 months of bank statements in place of tax returns. The most-used Non-QM program for self-employed borrowers, creators, and business owners.
DSCR Loans
Investment property loans qualified on the property’s rental cash flow. Five tiers including a No Ratio program for properties that do not yet cash-flow.
1099 Income Loans
For real estate agents, contractors, gig workers, voice actors, and creators paid through brand deals and platform 1099s — qualify directly on 1099 income, no tax returns required.
All Loan Options
VA, FHA, USDA, Conventional, Non-QM, DSCR, Bank Statement, construction, and second-lien programs in one place.
Written by J.D. Peck — Area Manager / Mortgage Loan Originator at Paramount Residential Mortgage Group, Inc. NMLS 314883. 25+ years originating, 3,100+ closed loans, Scotsman Guide Top Originator 2026. Last updated May 6, 2026. Program details verified against PRMG Non-QM Income Qualifying Product Profile (04/02/2026), PRMG Non-QM DSCR Product Profile (04/02/2026), and PRMG Alternative AUS Solution Product Profile (02/12/2026). Guidelines subject to change.
Find The Non-QM Path That Fits How You Earn
Soft credit pull. Real numbers based on your real income — not the income on your tax return.