What is a Non-QM loan?
A Non-QM loan is a mortgage that does not meet the Ability-to-Repay Qualified Mortgage (QM) rules. It is still a credit decision. The borrower still has to show they can repay. The file just does not look like a W-2 agency loan.
Lenders and investors write their own guidelines for these loans. There is no agency underwriting box for them.
QM is a rule set. Non-QM is everything outside it
QM requires ability to repay in a standard shape, typically W-2s, tax returns, and agency DTI, and it runs through agency underwriting. Non-QM still requires ability to repay, in the shape the investor accepts: bank statements, assets, 1099s, a P&L, or property cash flow. There is no agency AUS unless the lender runs their own rules engine. The agencies, or a QM patch, write the QM box. Each investor writes the Non-QM box.
Non-QM is not “no underwriting.” It is underwriting without an agency template.
Five ways to show income (or cash flow)
Bank statement. Self-employed borrowers who show deposits, not tax returns.
Asset depletion. Borrowers with substantial assets and lighter W-2 income.
1099 and P&L. Contractors and owners who qualify on 1099s or a profit-and-loss statement.
DSCR. Investors qualifying on property cash flow, not personal income.
Read the bank statement, asset depletion, 1099 and P&L, and DSCR hubs, or the income-method comparison if you are choosing a path. DSCR sits in both Non-QM and business-purpose conversations. The DSCR hub owns the product.
Non-QM requirements differ by investor. There is no single list
Searchers want “Non-QM loan requirements.” The honest answer is: it depends on the investor. Most programs still set floors on credit, LTV and down payment, reserves, documentation period (12 vs 24 months of statements, or 1 vs 2 years of 1099s), and property and occupancy. Those are rules. They differ by investor, which is why two lenders can look at the same file and disagree.
For ranges, see bank statement requirements and DSCR requirements.
There is no agency underwriting for Non-QM
Each investor’s guidelines act as their AUS. The lender who can encode those guidelines, and return a decision with findings, is the lender who stops running a scenario desk by hand. That is a software problem, not a product-type problem. See how a non-agency AUS decisions a file and how Non-QM lenders scale underwriting.