Non-QM Loans
Non-QM Loans for Self-Employed Borrowers, Investors & Unique Income
Last Reviewed: 2026 · Written by Heather Frye · Mortgage Professional since 2002
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Who Should Consider a Non-QM Mortgage?
Self-Employed? Own a Business? Don't Fit the Traditional Mortgage Box?
Flexible Mortgage Solutions for Entrepreneurs, Business Owners, Investors & Borrowers with Unique Income
If you’ve been told you don’t qualify because your tax returns don’t reflect your true income, you’re in the right place.
Today’s workforce looks very different than it did twenty years ago. More Americans are self-employed, own small businesses, work on commission, receive 1099 income, or invest in real estate than ever before. Unfortunately, traditional mortgage guidelines haven’t always kept up.
Every borrower has a unique story. My job isn’t to force you into a mortgage program … it’s to build a financing strategy around your life, your goals, and the way you earn your income.
A Non-QM loan may be worth exploring if any of the following describe your situation:
✔ You own your own business
Whether you’re a sole proprietor, LLC, S-Corporation, or Partnership, Non-QM financing may allow us to qualify you using alternative documentation instead of relying solely on your tax returns.
✔ You receive 1099 income
Many Realtors®, consultants, insurance agents, sales professionals, contractors, and other independent professionals receive 1099 income rather than a W-2 paycheck. Non-QM loans were designed with borrowers like you in mind.
✔ You write off a lot of business expenses
One of the biggest misconceptions I hear is:
“My CPA says I don’t make enough money to qualify.”
That’s often not true.
Many successful business owners legally maximize tax deductions, which lowers taxable income but doesn’t necessarily reflect their true cash flow.
✔ Your income changes from month to month
Commission-based income, seasonal income, bonuses, and business revenue don’t always fit neatly into conventional underwriting guidelines. Alternative documentation programs may provide additional flexibility.
✔ You own rental properties
If you’re building a real estate portfolio, traditional financing can become restrictive. Non-QM options—including DSCR loans—may make it easier to continue growing your investments.
✔ You have significant assets
Sometimes your income doesn’t tell the whole story. If you have substantial savings, retirement accounts, or investment assets, there may be loan programs that allow those assets to help you qualify.
✔ You’ve experienced a financial setback
Life happens.
If you’ve had a bankruptcy, foreclosure, short sale, or other credit event in the past, don’t assume homeownership is out of reach. Depending on your situation, there may be financing options available sooner than you think.
Common Myths About Non-QM Loans
❌ Myth: “I don’t qualify because I’m self-employed.”
Reality: Many self-employed borrowers purchase homes every year using Non-QM financing.
❌ Myth: “I write off too much on my taxes.”
Reality: That’s exactly why bank statement loans and other Non-QM programs exist.
❌ Myth: “Non-QM loans are only for borrowers with bad credit.”
Reality: Many Non-QM borrowers have excellent credit. Their income simply doesn’t fit traditional underwriting guidelines.
❌ Myth: “Non-QM loans are risky or ‘subprime.'”
Reality: Today’s Non-QM loans still require borrowers to demonstrate the ability to repay the loan. They simply offer more flexible ways to document income than conventional financing.
Which Loan Option May Be Right for You?
If You Are…
Self-Employed Business Owner
Realtor® or 1099 Professional
Real Estate Investor
Airbnb or Short-Term Rental Investor
High Net Worth Borrower
Retiree with Significant Assets
Small Business Owner with Large Tax Write-Offs
Borrower with Unique Income
You May Want to Explore…
Bank Statement Loan
Bank Statement Loan
DSCR Loan
DSCR Loan
Asset Depletion Loan
Asset Depletion Loan
Bank Statement Loan
Non-QM Mortgage Options
Every borrower’s financial picture is different. My job is to understand your goals, review your income, and recommend the loan program that best fits your situation—not force you into a one-size-fits-all solution.
What is a Non-QM Loan?
Let’s keep this incredibly simple.
A Non-QM (Non-Qualified Mortgage) loan is not a bad loan.
It simply means the loan doesn’t follow the standard underwriting guidelines used by conventional mortgage programs. Instead, Non-QM loans allow lenders to evaluate your financial picture using alternative methods to verify your ability to repay the loan.
Think of it this way…
Traditional mortgages were designed for people with:
✔ W-2 income
✔ Consistent paychecks
✔ Straightforward tax returns
But today’s workforce looks very different.
Who is a Non-QM Loan Designed For?
Self-Employed Business Owners
Own a business? Write-offs and other expenses may reduce your taxable income.
Bank statement loans may show your real cash flow.
Ideal for:
- Business owners
- Self-employed entrepreneurs
- Qualified based on your business cash flow
1099 Contractors & Professionals
You earn income, but it doesn’t come in the form of a W-2 paycheck.
Ideal for:
- Realtors
- Insurance agents
- Sales professionals
- Consultants
- Commissioned employees
Real Estate Investors
Own or are purchasing rental properties?
Non-QM loans offer investor-friendly financing.
Ideal for:
- DSCR loans
- Asset utilization
- Portfolio loans
- No tax returns required on many programs
High Net Worth Borrowers
Your income doesn’t tell the whole story.
Leverage your assets to qualify.
Options include:
- Asset depletion loans
- Liquid asset loans
- Investment income options
- Bank statement lending
Borrowers With Credit Challenges
Recent credit events happen.
Non-QM loans can help you get back on track.
Examples include:
- Bankruptcy
- Foreclosure
- Short sale
- Collection accounts
- Self-employed with credit events
Other Unique Situations
We look at your unique financial picture, not just a checklist.
Examples:
- Fluctuating income
- Large write-offs
- Seasonal income
- Retired business owners
- Foreign national borrowers
Common Types of Non-QM Loans
Bank Statement Loans
Qualify using a calculation of the deposits into your business or personal bank statements over a fixed period of time, instead of tax returns. Bank Statement loans are best for self employed borrowers with high asset profiles and gross taxable income, who are taking advantage of every tax break and write off opportunity available to them. Bank statement loans also work very well for business owners who have a substantial deposit history in their bank accounts.
Asset Depletion
Use your assets to qualify instead of traditional income. Using asset depletion, we would calculate how much of your assets your could withdraw on a monthly basis over a specific period of time (typically 120-210 months) to determine your “monthly” qualifying income.
DSCR Loans
Perfect for investors. This is my favorite “non-qm” loan. I have used this loan personally many times for my personal investment portfolio – but hundreds of times for my investor clients and my first time investors as well.
Qualify based on the property’s cash flow—not your personal income. With DSCR loans – we get an appraisal on the property that you are using as collateral for the loan (subject property) and the appraiser completes a 1007 rental schedule appraisal – which provides a “fair market rent” estimate based on other similar rentals in the area. As long as that projected rental payment covers the new mortgage payment, no other income documentation is required to qualify for or secure the loan. DSCR loans typically require 20% minimum down payment.
Interest-Only Options
Available on certain Non-QM programs for qualified borrowers. These can reduce initial monthly payments – by only requiring interest payments for qualification purposes, but aren’t the right fit for everyone. These are best suited for short term holds and investors.
Real Borrower Scenarios
The following examples are fictional, but they’re based on situations I see regularly when helping self-employed borrowers and investors throughout Virginia.
Sarah – The Salon Owner
Sarah owns a thriving salon that generated nearly $280,000 last year.
Like many successful business owners, she worked closely with her CPA to maximize legitimate tax deductions for payroll, rent, supplies, advertising, equipment, and her company vehicle.
By the time her tax return was complete, her taxable income looked dramatically lower than the actual cash flowing through her business.
She assumed buying a home wasn’t possible.
The reality?
Her business was healthy.
Her cash flow was strong.
She simply needed a mortgage program that evaluated her income differently.
Takeaway: A lower taxable income doesn’t always mean you can’t qualify for a mortgage.
Mike – The HVAC Contractor
Mike owns a local HVAC company serving homeowners throughout the Fredericksburg area.
Some months are incredibly busy.
Other months slow down.
His income fluctuates throughout the year, and nearly all his revenue flows through his LLC.
He assumed those fluctuations meant he wouldn’t qualify for financing.
Instead, we reviewed loan programs specifically designed for self-employed borrowers with variable income.
After reviewing his complete financial picture, we identified financing options that better reflected how his business operates.
Takeaway: Variable income doesn’t automatically mean you can’t qualify. Finding the right loan program matters.
Common Self-Employed Borrowers I Help
In the Fredericksburg area I frequently work with:
- Realtors®
- Government Contractors
- Small Business Owners
- Medical Professionals
- Military Families with Side Businesses
- Builders
- HVAC Companies
- Electricians
- Plumbers
- Attorneys
- Investors
Frequently Asked Questions
Can I qualify without tax returns?
Possibly, yes.
One of the biggest advantages of many Non-QM loan programs is that some borrowers may qualify without providing traditional tax returns. Instead, income may be verified using bank statements, assets, or other alternative documentation.
The best option depends on your employment type, income, and financial situation. We’ll review your goals and determine which documentation is required for your specific loan.
Can I use bank statements to qualify?
Yes! Bank statement loans are one of the most popular Non-QM financing options for self-employed borrowers.
Instead of using tax returns, some lenders allow you to qualify using 12 or 24 months of personal or business bank statements to verify your income. This can be especially beneficial if your tax returns don’t accurately reflect how much money you actually earn.
Can I qualify if I write off everything?
Maybe—and this is exactly why Non-QM loans exist.
Many business owners work with their CPA to maximize legitimate tax deductions, which can significantly reduce their taxable income. While that may help at tax time, it can make qualifying for a traditional mortgage more difficult.
Non-QM programs may offer alternative ways to evaluate your income, including bank statement loans and other flexible documentation options. If you’re self-employed and have been told you don’t qualify because of your tax returns, let’s talk before you give up.
Do Non-QM loans have higher interest rates?
Sometimes—but not always.
Because Non-QM loans offer greater flexibility than traditional financing, interest rates may be slightly higher depending on your credit profile, down payment, and loan program. However, many borrowers find that the ability to qualify using alternative documentation far outweighs a modest difference in rate.
We’ll compare all available loan options to help you choose the financing that best fits your goals.
Can I refinance later?
Absolutely.
Just like many other mortgage programs, Non-QM loans can often be refinanced in the future if your financial situation changes or if interest rates improve.
Many borrowers initially use a Non-QM loan to purchase or refinance a home and later transition into a Conventional loan once they meet traditional qualifying guidelines.
Can I buy an investment property with a Non-QM loan?
Yes.
Many real estate investors use Non-QM financing to purchase or refinance investment properties, especially when traditional lending guidelines become restrictive.
Programs such as DSCR (Debt Service Coverage Ratio) loans allow qualifying based on the property’s income rather than your personal income, making them a popular choice for rental property investors by reducing paperwork and simplifying the process.
Can I use LLC income to qualify?
Often, yes.
Many self-employed borrowers operate their business as an LLC, S-Corporation, Partnership, or Sole Proprietorship. Depending on the loan program, income generated through your business may be used to help qualify.
The documentation required will depend on how your business is structured and which Non-QM program is the best fit for your situation.
Can I qualify with fluctuating income?
Yes.
Many professionals experience income that changes from month to month or season to season. This includes business owners, commission-based sales professionals, Realtors®, consultants, and independent contractors.
Traditional mortgage programs don’t always work well for borrowers with variable income. Non-QM financing was designed to provide additional flexibility for qualified borrowers whose income doesn’t fit into a traditional W-2 paycheck.
Every situation is different, and I’ll help you determine which loan program best reflects your true financial picture.
Helping Self-Employed Borrowers Across Virginia
I work with business owners, entrepreneurs, Realtors®, contractors, investors and self-employed professionals throughout:
- Stafford
- Fredericksburg
- Spotsylvania
- King George
- Caroline
- Orange
- Culpeper
- Prince William
- Virginia, Maryland, DC, WV, TN, PA, SC, NC, FL, TX
- Quantico
What Happens Next?
If you think a Non-QM loan might be the right fit, here’s what you can expect.
Still don't see your situation?
Let’s Find the Right Mortgage for Your Story
No two borrowers are exactly alike.
Whether you’re self-employed…
Growing your investment portfolio…
Working on commission…
Or simply don’t fit the traditional mortgage box…
I’d love to help.
Let’s talk about your goals and build a financing strategy around your life—not force your life into a mortgage program.
Heather Explains💡
💬 Why Your CPA and Mortgage Lender May Look at Your Income Differently
One of the biggest misconceptions I hear is:
“I won’t qualify because I write too much off on my taxes.”
I specialize in identifying financing solutions for borrowers whose income doesn’t fit traditional mortgage guidelines. As a business owner, the IRS affords you so many different opportunities to leverage every aspect of your financials to save money on your tax liability and reward you for bringing money into the economy. Smart business owners usually have lower tax liability because they understand that tax strategy is extremely important for their business success. I have worked with hundreds of local businesses to ensure that they are setup to qualify for mortgage financing in these complex and unique situations.
As a local business owner with my husband, Drew, we operate a multi-million-dollar company in the local Stafford & Fredericksburg areas.
As a local investor, I own both commercial and residential properties and have personally used these Non-QM and DSCR options for our personal portfolio.
I have the creativity, professional product knowledge and experience to help you navigate your own unique strategy.
