Non-QM Loans Through Wholesale Brokers: Programs Banks Don't Offer [2026]
How wholesale access unlocks alternative mortgage programs for borrowers who don't fit the traditional lending box
Non-QM (non-qualified mortgage) loans provide mortgage solutions for borrowers who don't meet conventional lending guidelines—self-employed professionals, real estate investors, foreign nationals, and those recovering from credit events. These programs exist almost exclusively in the wholesale channel, where brokers access 50+ specialized non-QM lenders. Banks rarely offer non-QM products because they can't sell them to Fannie Mae or Freddie Mac. According to Mo Abdel (NMLS #1426884) at Lumin Lending, "Non-QM loans represent the most significant advantage of working with a wholesale broker—we access entire categories of programs that banks simply don't have."
Table of Contents
What Is a Non-QM Loan?
Non-QM stands for "non-qualified mortgage"—a loan that doesn't meet the Consumer Financial Protection Bureau's definition of a Qualified Mortgage (QM). This isn't a negative designation; it simply means the loan uses alternative underwriting methods.
Qualified Mortgage (QM) Requirements
To be a QM, a loan must meet strict criteria:
- Full income documentation: Tax returns, W-2s, pay stubs
- Debt-to-income ratio: Generally 43% or less
- Loan terms: 30 years or less, fully amortizing
- Points and fees: Limited to 3% of loan amount
- No risky features: No interest-only, negative amortization, or balloon payments
What Makes a Loan Non-QM
A loan becomes non-QM when it doesn't meet one or more QM requirements:
- Alternative income documentation: Bank statements instead of tax returns
- Higher DTI ratios: Above the 43% threshold
- Interest-only payments: Principal deferred for a period
- Non-standard qualification: Asset-based, rental income, or no income verification
- Recent credit events: Shorter waiting periods after bankruptcy or foreclosure
Why Non-QM Loans Exist
QM rules work well for W-2 employees with steady income—but millions of creditworthy Americans don't fit that profile:
- Self-employed business owners
- Real estate investors with multiple properties
- Retirees living on assets
- Foreign nationals working in the US
- Borrowers rebuilding after financial hardship
Non-QM loans serve these borrowers with tailored underwriting that accounts for their unique financial situations.
Why Non-QM Lives in the Wholesale Channel
Non-QM loans are overwhelmingly originated through wholesale mortgage brokers, not retail banks. Here's why:
Banks Can't Sell Non-QM to GSEs
Fannie Mae and Freddie Mac only purchase Qualified Mortgages. Banks that sell loans to these government-sponsored enterprises have no incentive to originate non-QM products they can't sell.
Specialized Lenders Serve This Market
Non-QM lenders are typically specialty finance companies that:
- Hold loans in portfolio or sell to private investors
- Specialize in specific non-QM niches
- Develop sophisticated underwriting for alternative documentation
- Accept the risk profile in exchange for higher yields
Brokers Access Multiple Non-QM Specialists
Wholesale brokers work with 50+ non-QM lenders, providing:
- Program variety: Different lenders specialize in different borrower types
- Guideline variations: If one lender declines, another may approve
- Rate competition: Multiple lenders bidding for business
- Solution finding: Match complex scenarios with appropriate lenders
The Wholesale Non-QM Advantage
A bank has zero or one non-QM program. A wholesale broker accesses 50+ non-QM lenders with hundreds of program variations. For borrowers who don't fit the conventional box, this difference determines whether they get a mortgage at all.
Types of Non-QM Programs
The non-QM category encompasses multiple distinct program types, each designed for specific borrower situations:
| Program Type | Best For | Key Feature | Min Credit |
|---|---|---|---|
| Bank Statement | Self-employed | Deposits verify income | 620-680 |
| DSCR | Investors | Property income qualifies | 620-660 |
| Asset Depletion | High net worth | Assets divided by term | 680-700 |
| Foreign National | Non-US citizens | No SSN required | 660-700 |
| Recent Credit Event | Post-bankruptcy | Shorter waiting periods | 620-660 |
| Interest-Only | Cash flow seekers | Lower initial payments | 700-720 |
Bank Statement Loans
Bank statement loans are the most common non-QM product, designed for self-employed borrowers whose tax returns understate income due to business deductions.
How Bank Statement Loans Work
- Income verification: 12-24 months of bank statements
- Calculation: Average deposits minus expense factor
- Expense factors: 25-50% depending on business type
- No tax returns: Deposits prove income capacity
Typical Requirements
- Credit score: 620-680 minimum
- Down payment: 10-20%
- Self-employment: 2 years (some allow 1 year)
- Reserves: 3-12 months PITI
- Loan amounts: Up to $3M+
Learn more: Bank Statement Loans: Complete Guide
DSCR Investment Loans
DSCR (Debt Service Coverage Ratio) loans qualify investment properties based on rental income, not the borrower's personal income.
How DSCR Loans Work
- Qualification basis: Property's rental income vs. debt payments
- DSCR calculation: Rent / PITIA = ratio (1.0+ typically required)
- No income verification: No W-2s, tax returns, or employment checks
- Business entity OK: Can close in LLC name
Typical Requirements
- Credit score: 620-660 minimum
- Down payment: 20-25%
- DSCR ratio: 0.75-1.25 depending on lender
- Property types: 1-4 units, short-term rentals, mixed-use
- Loan amounts: Up to $2-3M
DSCR Example
- Monthly rent: $4,500
- PITIA (Principal, Interest, Taxes, Insurance, Association): $3,600
- DSCR: $4,500 / $3,600 = 1.25
- Result: Qualifies (income covers payment with 25% cushion)
Asset Depletion Programs
Asset depletion loans qualify borrowers based on liquid assets rather than income—ideal for retirees, trust beneficiaries, and high-net-worth individuals without traditional employment income.
How Asset Depletion Works
- Calculation: Qualifying assets / loan term months = monthly "income"
- Qualifying assets: Bank accounts, investments, retirement (discounted)
- No employment: No job or income verification needed
- Large balances required: Significant assets needed to qualify
Asset Depletion Example
- Liquid assets: $2,000,000
- Down payment + closing costs: $400,000
- Remaining assets: $1,600,000
- Divided by 360 months: $4,444/month qualifying income
Foreign National Loans
Foreign national programs serve non-US citizens without Social Security numbers or US credit history who want to purchase US real estate.
Program Features
- No SSN required: ITIN or foreign ID acceptable
- No US credit: Foreign credit reports or alternative credit
- Higher down payment: Typically 25-30% minimum
- Property types: Primary residence, second home, investment
- Documentation: Passport, visa, foreign income verification
Common Foreign National Scenarios
- International executives relocating to California
- Foreign investors purchasing US real estate
- Visa holders (H1B, L1, E2) without sufficient US credit history
- Dual citizens without established US financial profiles
Recent Credit Event Programs
These programs offer shorter waiting periods for borrowers recovering from bankruptcy, foreclosure, short sale, or other credit events.
Conventional Waiting Periods vs. Non-QM
| Credit Event | Conventional Wait | Non-QM Wait |
|---|---|---|
| Chapter 7 Bankruptcy | 4 years | 1-2 years |
| Chapter 13 Bankruptcy | 2-4 years | 1 year (or discharge) |
| Foreclosure | 7 years | 2-3 years |
| Short Sale | 4 years | 1-2 years |
| Deed in Lieu | 4 years | 1-2 years |
Requirements for Recent Credit Event Programs
- Re-established credit: Active tradelines since event
- Down payment: Typically 20-25%+ required
- Explanation letter: Document circumstances of credit event
- Reserves: 6-12 months required
- Higher rates: Rate premium for recent events
Non-QM Rates and Requirements
Typical Rate Premiums
Non-QM rates are higher than conventional due to increased risk and non-GSE status:
| Program | Rate Premium vs Conventional |
|---|---|
| Bank Statement (strong credit) | +0.5-1.0% |
| Bank Statement (lower credit) | +1.0-1.5% |
| DSCR (good ratio) | +0.5-1.0% |
| Asset Depletion | +0.5-1.0% |
| Foreign National | +1.0-2.0% |
| Recent Credit Event | +1.5-2.5% |
Common Requirements Across Non-QM
- Down payment: 10-30% depending on program and credit
- Credit scores: 580-720 minimum depending on program
- Reserves: 3-12 months PITI typically required
- Loan amounts: Most programs go to $2-3M, some to $5M+
- Property types: Primary, second home, investment (varies)
Who Benefits from Non-QM Loans
Self-Employed Business Owners
Tax write-offs reduce reportable income, making conventional qualification difficult. Bank statement and P&L programs solve this by using actual cash flow.
Real Estate Investors
DSCR loans let investors scale portfolios without income-qualifying each property personally. The property's income is all that matters.
High-Net-Worth Individuals
Retirees, trust beneficiaries, and those living on investments can qualify through asset depletion without needing employment income.
Foreign Nationals
International buyers and workers without US credit history access homeownership through foreign national programs.
Credit Recovery Borrowers
Those rebuilding after bankruptcy or foreclosure can purchase sooner through recent credit event programs with shorter waiting periods.
Related: Self-Employed Mortgage Guide
Frequently Asked Questions
What is a non-QM loan?
A non-QM (non-qualified mortgage) loan doesn't meet the Consumer Financial Protection Bureau's "Qualified Mortgage" standards for conventional sale to Fannie Mae/Freddie Mac. These loans offer flexible guidelines for borrowers who don't fit traditional lending boxes—self-employed, investors, foreign nationals, and those with recent credit events.
Why do wholesale brokers have better non-QM options?
Wholesale brokers access 50+ non-QM lenders, each with unique programs and guidelines. Banks typically don't offer non-QM products at all. This wholesale access means brokers can find solutions for complex scenarios that banks simply cannot accommodate.
Are non-QM loans safe?
Yes. Non-QM loans are legitimate, regulated mortgage products—just with different underwriting standards than conventional loans. They must still comply with federal lending laws. The "non-QM" designation simply means they're held in portfolio or sold to private investors rather than government-sponsored enterprises.
What types of non-QM loans are available?
Major non-QM categories include: bank statement loans (self-employed income), DSCR loans (investment properties), asset depletion (qualify on savings), foreign national programs (non-US citizens), recent credit event programs (post-bankruptcy/foreclosure), and interest-only loans (payment flexibility).
What credit score do I need for a non-QM loan?
Non-QM credit requirements vary by program and lender. Bank statement loans typically require 620-680 minimum. DSCR loans start at 620-660. Some lenders offer programs for scores as low as 580 with compensating factors like larger down payments.
Are non-QM loan rates higher?
Non-QM rates are typically 0.5-2% higher than conventional rates, depending on the program and risk factors. However, for borrowers who cannot qualify conventionally, non-QM loans provide mortgage access that wouldn't otherwise exist. The rate premium reflects the flexible guidelines.