Non-QM (Non-Qualified Mortgage) loans provide financing for borrowers who don’t fit the strict guidelines of conventional loans, such as self-employed individuals, those with recent credit events, or people with high debt-to-income (DTI) ratios. These loans don’t meet the Consumer Financial Protection Bureau’s (CFPB) “qualified mortgage” standards, which means they allow for more flexibility in income documentation, credit scores, and property types. Common examples include bank statement loans, asset depletion loans, and interest-only mortgages.

Lenders take on more risk with Non-QM loans, which often results in higher interest rates and more thorough due diligence. However, for borrowers who are financially stable but can’t meet conventional guidelines—like entrepreneurs or gig workers—Non-QM loans can be a valuable path to homeownership or real estate investment. These loans offer creative solutions but require a clear understanding of terms and potential long-term costs.