Non-QM income documentation: bank statement vs 1099 vs asset depletion vs P&L
Four ways to document income on a Non-QM file. Who each method fits, what documents you need, how income is calculated, and how lenders keep four rulebooks straight.
Four methods, side by side
Bank statement fits self-employed borrowers with messy returns. Documents: 12 or 24 months of statements. Income math: eligible deposits minus an expense factor. Extra rules: NSF, transfers, personal vs business. Quirk: two underwriters, two incomes, unless rules are written.
1099 fits contractors paid on 1099s. Documents: 1 to 2 years of 1099s. Income math: gross, minus a factor or via a P&L. Extra rules: gross vs net, deposit match. Often paired with statements.
Asset depletion fits asset-rich, income-light borrowers. Documents: asset statements. Income math: assets after haircuts, divided by months. Extra rules: what counts, 240 vs 360. Formula fights happen in the haircuts.
P&L fits owners with a current P&L. Documents: CPA or borrower P&L. Income math: P&L net, with match rules. Extra rules: who prepared it, seasoning. Some investors will not take borrower-prepared.
Pick the method by the documents the borrower can produce
Strong deposits, weak returns: bank statement. Paid on 1099s: 1099, sometimes with a P&L. Large eligible assets, thin W-2: asset depletion. Current CPA P&L that the investor accepts: P&L path. If the property is the qualifier, you want DSCR, not these four.
Write all four methods as rules in one engine
Four methods should not mean four desks that each know one guideline. Write each method as a rule set. AUS runs the one that applies and returns the finding.
Bank statement loan
1099 and P&L loans
Asset depletion loan
DSCR loan
Non-QM loan hub
Keep up with industry insights and LoanPASS updates.
Subscribe for updates, insights, and other great content.