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.
| Feature | Qualified mortgage (QM) | Non-qualified mortgage (Non-QM) |
|---|---|---|
| Income documentation | W-2s, pay stubs, and tax returns | Bank statements, assets, contracts, or alternative income sources |
| Debt-to-income (DTI) ratio | Capped at 43% | Often allows higher DTI with strong compensating factors |
| Credit requirements | Traditional credit score and history required | May allow alternative credit history or manual underwriting |
| Employment history | Must show stable employment over 2+ years | May accept recent job changes or self-employment |
| Loan structure | Must meet federal “safe” standards | More flexible loan repayment types like interest-only |
| Government backing | Eligible for FHA, VA, and USDA | Not backed by federal programs |
| Flexibility | Not very flexible; must meet the tighter guidelines | More flexibility 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:
| Borrower type | Why Non-QM works |
|---|---|
| Self-employed borrowers | Qualify using 12–24 months of bank statements to show cash flow instead of tax returns. |
| Gig workers and 1099 contractors | Use average monthly deposits rather than relying on inconsistent or seasonal income on a tax form. |
| High-asset, low-income borrowers | Use asset depletion to calculate qualifying income from investments, savings, or retirement funds. |
| Borrowers with recent job changes | May qualify with a strong new income stream even without a full 2-year job history. |
| Buyers with credit challenges or no score | Manual underwriting or alternative credit evaluations can help you qualify even without a traditional credit profile. |
| Real estate investors | Qualify based on rental income or property cash flow (DSCR) instead of personal income. |
| Medical professionals | Designed for doctors, dentists, and specialists with new or unique income structures. |
| ITIN borrowers | Some programs allow buyers to qualify with an Individual Taxpayer Identification Number instead of a Social Security Number. |
| Buyers of non-warrantable condos | Options for condos that don’t meet Conventional loan standards (like condotels or 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 | Cons |
|---|---|
| Flexible documentation: alternative income verification allowed | Higher interest rates: risk-based pricing can mean slightly higher rates |
| Faster approvals: especially for borrowers with straightforward cash flow | Larger down payments: some Non-QM loans may require 10–20% down |
| Customized underwriting: more room for real-world situations | Limited availability: Not all lenders offer Non-QM options |
| Access to homeownership: when traditional loans are out of reach | Not eligible for government programs: no 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:
| Loan option | Best for | Highlights |
|---|---|---|
| Amazon employee mortgage | New Amazon hires with sign-on bonuses | Lets buyers use their Amazon sign-on bonus toward a home purchase |
| Bank statement mortgage | Self-employed borrowers | Qualify using consistent monthly deposits instead of tax returns |
| DSCR mortgage | Real estate investors | Qualify based on the cash flow of the property, not personal income or employment verification |
| Interest-only mortgage | Borrowers wanting lower initial payments | Pay interest only upfront, with the option to pay more |
| ITIN mortgage | Borrowers without a Social Security Number | Qualify with an Individual Tax Identification Number (ITIN) |
| Medical doctor options | Physicians, dentists, and other medical professionals | Up to 100% financing and flexibility for new grads or recent hires |
| Non-warrantable condo mortgage | Buyers purchasing unconventional condos (e.g. condotels) | Finance units that fall outside Conventional lending requirements |
| Restricted stock units (RSU) mortgage | Borrowers compensated with stock | Use RSUs as part of 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.
Talk to a loan officer and 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.