Non-QM Loans
For Self-Employed
Struggling to get a mortgage because you are self-employed, a real estate investor, or have a unique financial profile?
If you have been turned down for a home loan despite having the income to afford one, you are not alone. Traditional lenders rely on rigid, automated guidelines that often fail to capture the full picture of a borrower’s financial health.
At Prysma, we believe your ability to buy a home shouldn't be dictated by a standardized checklist. Unlike government-backed loans (such as FHA or VA) or conventional mortgages that require W-2s and strict tax return documentation, Non-QM loans are designed specifically for borrowers who do not fit the traditional "box."
What is a Non-QM Loan? (And What It Is Not)
A Non-Qualified Mortgage (Non-QM) is a home loan designed for borrowers who do not meet the strict criteria of the "Qualified Mortgage" standards set by the Consumer Financial Protection Bureau (CFPB).
Standard Qualified Mortgages (QM)—like Conventional, FHA, and VA loans—rely heavily on traditional income verification methods, such as tax returns and W-2s. If your tax returns show significant deductions (common for business owners) or if your income fluctuates (common for gig workers), a standard QM loan algorithm will often reject your application.
Important Correction: Non-QM loans are not government loans. FHA and VA loans are government-backed Qualified Mortgages. Non-QM loans are alternative portfolio products that use flexible, common-sense underwriting methods to verify a borrower's Ability-to-Repay (ATR).
QM vs. Non-QM: What is the Difference?
Feature
Qualified Mortgage (QM)
Non-Qualified Mortgage (Non-QM)
Best For
W-2 employees, standard finances
Self-employed, investors,unique income
Income Verification
Tax returns, W-2s, Pay Stubs
Tax returns, W-2s, Pay Stubs
DTI Ratio
Strict (Typically < 43%)
Flexible (Often > 50% allowed)
Underwriting
Automated systems (Desktop Underwriter)
Manual Underwriting (Human review)
Loan Types
Conventional, FHA, VA, USDA
Bank Statement, DSCR, ITIN, Asset-Based
QM vs. Non-QM: What is the Difference?
Feature
Qualified Mortgage (QM)
Non-Qualified Mortgage (Non-QM)
Best For
W-2 employees, standard finances
Self-employed, investors,unique income
Income Verification
Tax returns, W-2s, Pay Stubs
Tax returns, W-2s, Pay Stubs
DTI Ratio
Strict (Typically < 43%)
Flexible (Often > 50% allowed)
Underwriting
Automated systems (Desktop Underwriter)
Manual Underwriting (Human review)
Loan Types
Conventional, FHA, VA, USDA
Bank Statement, DSCR, ITIN, Asset-Based
QM vs. Non-QM: What is the Difference?
Best For
Qualified Mortgage (QM)
W-2 employees, standard finances
Non-Qualified Mortgage (Non-QM)
Self-employed, investors,unique income
Income Verification
Qualified Mortgage (QM)
Tax returns, W-2s, Pay Stubs
Non-Qualified Mortgage (Non-QM)
Tax returns, W-2s, Pay Stubs
DTI Ratio
Qualified Mortgage (QM)
Strict (Typically < 43%)
Non-Qualified Mortgage (Non-QM)
Flexible (Often > 50% allowed)
Underwriting
Qualified Mortgage (QM)
Automated systems (Desktop Underwriter)
Non-Qualified Mortgage (Non-QM)
Manual Underwriting (Human review)
Loan Types
Qualified Mortgage (QM)
Conventional, FHA, VA, USDA
Non-Qualified Mortgage (Non-QM)
Bank Statement, DSCR, ITIN, Asset-Based
Who are Non-QM LoansDesigned For?
Non-QM loans are not "bad credit" loans; they are "smart money" loans for borrowers with complex finances.
1. The Self-Employed & Business Owner
You run a successful business, but you write off expenses to lower your taxable income. While this is smart for taxes, it makes you look "poor" to a conventional mortgage lender. We look at your actual cash flow, not just your taxable net income.
2. The Real Estate Investor
You want to grow your portfolio but have hit the limit on the number of conventional loans allowed (typically 10), or your personal Debt-to-Income (DTI) ratio is too high. Non-QM allows you to qualify based on the property's income, not your personal job income.
3. The ITIN Holder
You live and work in the U.S. and pay taxes, but you do not have a Social Security Number. Prysma offers specialized Non-QM products that allow ITIN holders to build wealth through homeownership.
4. Borrowers withUnique Income
Whether you are a gig economy worker, a retiree with significant assets but low monthly income, or a commission-based salesperson, traditional underwriting doesn't work for you. We tailor the loan to your specific situation.
5. Borrowers with Recent Credit Events
If you have had a bankruptcy or foreclosure recently, conventional loans force you to wait up to 7 years. Non-QM loans have much shorter waiting periods (sometimes as little as 1 day post-discharge), allowing you to re-enter the market sooner.
Types of Non-QM LoansOffered by Prysma
We offer a diverse suite of Non-QM products.Here is how we can help you qualify:
ITIN Loans
Best for: Non-citizens living and working in the U.S.
Prysma is a leader in lending to the Hispanic and immigrant communities. Our ITIN program allows you to purchase a home using your Individual Taxpayer Identification Number. We accept alternative credit references (like utility bills or rent history) if you do not have a traditional credit report.
The Non-QM Loan Process:A Different Approach
The process for a Non-QM loan is more personalizedthan a standard mortgage. Because we don't rely on a computerto approve you, we take a "common sense" approach.
Initial Consultation
We review your unique scenario. Are you self-employed? An investor? We identify the "story" behind your finances.
Selecting the Program
We match you with the specific product (e.g., Bank Statement vs. DSCR) that yields the highest qualifying income or best terms.
Alternative Documentation
Instead of hunting down W-2s, you will provide the specific documents for your program (e.g., 12 months of bank statements).
Manual Underwriting
This is the Prysma difference. A real human underwriter reviews your file to make a decision based on the full picture, not just a credit score.
Closing
Once approved, we move to close your loan efficiently, getting you into your new home or investment property.
Non-QM Loan Requirements:What to Expect
Requirement
General Guideline
Credit Score
Flexible. Programs often start at 600-660. Higher scores yield better interest rates.
Down Payment
Typically 15-25%. Because these loans carrymore risk for the lender, "skin in the game"is required.
Income
Verified via Bank Statements, DSCR, Assets,or P&L. No W-2s required for most programs.
Reserves
Lenders may require you to have 3-12 months ofmortgage payments saved in the bank after closing.
Loan Limits
Can often go up to $3 Million+allowing for luxury purchases.
Non-QM Loan Requirements: What to Expect
Requirements
Credit Score
Flexible. Programs often start at 600-660. Higher scores yield better interest rates.
Down Payment
Typically 15-25%. Because these loans carry more risk for the lender, "skin in the game" is required.
Income
Verified via Bank Statements, DSCR, Assets, or P&L. No W-2s required for most programs.
Reserves
Lenders may require you to have 3-12 months of mortgage payments saved in the bank after closing.
Loan Limits
Can often go up to $3 Million+allowing for luxury purchases.
FAQ: Your Top Non-QM Loan Questions Answered
What is a Non-QM loan?
A Non-QM (Non-Qualified) Mortgage is a home loan designed for borrowers whodon't meet the strict criteria of standard "Qualified Mortgages." It uses alternativemethods to verify your ability to repay, making it ideal for self-employed individuals,real estate investors, and those with unique income situations.
Are FHA and VA loans considered Non-QM?
No. This is a common misconception. FHA and VA loans are Qualified Mortgagesbecause they are backed by the government and follow specific federal guidelines.Non-QM loans are private portfolio loans and are not backed by the government.
Who is a good candidate for a Non-QM loan?
You are a great candidate if you are self-employed, a real estate investor, a gigeconomy worker, have a recent credit event (like a bankruptcy), have a highnet worth with complex income, or are a foreign national/ITIN holder.
What is a bank statement loan?
A bank statement loan is a popular type of Non-QM loan wherelenders use 12 or 24 months of your personal or businessbank statements to verify your income, instead of traditionaltax returns or W-2s. This allows business owners to utilizetheir true cash flow for qualification.
Are ITIN loans a type of Non-QM loan?
Yes, ITIN loans are often structured as Non-QM loans because they serve borrowerswithout a Social Security Number, which falls outside of standard QM guidelines.
Are interest rates higher for Non-QM loans?
Interest rates for Non-QM loans are typically slightly higher than fo conventional QM loans (often 0.5% to 1.5% higher) to account for the additionalunderwriting flexibility. However, they are still very competitive and providea path to homeownership that would otherwise be unavailable.
What is the minimum down payment for a Non-QM loan?
Down payments typically range from 15% to 25%,depending on the specific Non-QM program, your creditscore, and your overall financial profile.
Can I get a Non-QM loan with a lower credit score?
Yes, Non-QM loans generally have more flexible credit requirementsthan conventional loans, with some programs accepting scores as low as600-620, provided you have a larger down payment or strong reserves.
Is the Non-QM loan process slower?
Because Non-QM loans involve manual underwriting to review yourunique financial situation, the process can sometimes take a bit longer thanan automated QM loan approval. However, at Prysma, our in-houseexpertise ensures the process is as smooth and efficient as possible,often closing in 30 days.
What is the main benefit of a Non-QM loan?
The main benefit is flexibility. Non-QM loans look at the bigger picture of your financial health, not just whether you fit into a rigid box,opening the door to homeownership for many qualified buyers whoare overlooked by traditional lending.
Can I refinance into a Non-QM loan?
Yes, Non-QM refinancing (both Rate & Term and Cash-Out) is available. This is a great option for self-employed borrowers who want to tap into theirhome's equity but don't show enough income on tax returnsfor a conventional cash-out refinance.
Why Prysma is the Leading Non-QM Lender
At Prysma Lending Group, we don't just sell mortgages; we solve problems.
While many big banks shy away from anything that isn't a "cookie-cutter" loan, we thrive on complexity. Our team of Non-QM specialists understands how to read a P&L statement, how to analyze real estate portfolios, and how to structure a loan for an ITIN holder.
We Listen
We take the time to understand your business and your goals.
We Analyze
We find the income that other lenders miss.
We Deliver
We offer competitive rates and a transparent process from application to closing.
Prysma is the Right Choice for You
Don't Let a "Unique" Financial Profile Stop You.
Homeownership should be accessible to entrepreneurs, investors, and modern workers. If you have been told "No" by a traditional bank, it’s time to talk to Prysma. We have alternative solutions to get you to "Yes."
Have a unique scenario? Let our Non-QM experts find your solution.