Quick Requirements Overview
Credit Score
580+
Varies by program
Down Payment
10-25%
Based on profile strength
DTI Ratio
Up to 50%
Flexible guidelines
Core Qualification Requirements
Credit Score Requirements
Minimum Scores by Program:
- • Bank Statement Loans: 620+ (600 with compensating factors)
- • Asset-Based Loans: 660+ typically
- • DSCR Investment Loans: 640+ (620 with larger down payment)
- • P&L Statement Loans: 640+
- • Post-Credit Event: 580+ (case-by-case)
Credit Considerations:
- • Recent credit events evaluated individually
- • Multiple late payments in past 12 months may impact approval
- • Collections under $1,000 may be overlooked
- • Credit inquiries less restrictive than conventional loans
- • Compensating factors can offset lower scores
Note: Lower credit scores typically require larger down payments and may result in higher interest rates. However, credit is just one factor in the approval process.
Down Payment Requirements
| Loan Program | Primary Residence | Second Home | Investment Property |
|---|---|---|---|
| Bank Statement | 10-15% | 15-20% | 20-25% |
| Asset-Based | 20-30% | 25-35% | 30-40% |
| DSCR Investor | N/A | N/A | 20-25% |
| Post-Credit Event | 20-25% | 25-30% | 30-35% |
Gift Funds: Many programs accept gift funds for part of the down payment (typically up to 100% for primary residence, varies for investment properties)
Source of Funds: Must document and season down payment funds (typically 60 days of statements)
Debt-to-Income (DTI) Ratio
Standard Guidelines:
- • Front-end DTI: Up to 43-45%
- • Back-end DTI: Up to 50% (sometimes higher)
- • More flexible than conventional loans
- • Strong compensating factors can allow higher ratios
- • Asset reserves may offset higher DTI
What Counts as Debt:
- • Credit card minimum payments
- • Auto loans and leases
- • Student loans (varies by payment status)
- • Other mortgage payments
- • Personal loans
- • Child support/alimony payments
DSCR Exception: Investment property DSCR loans don't use personal DTI—they qualify based solely on the property's rental income.
Income Documentation Requirements
Bank Statement Loans
Required Documents:
- ✓ 12-24 months personal or business bank statements
- ✓ CPA letter (some programs)
- ✓ Business license or proof of self-employment
- ✓ Year-to-date P&L (optional but helpful)
Income Calculation: Average monthly deposits minus business expense factor (typically 25-50% depending on business type)
Learn more about Bank Statement Loans →Asset-Based Loans
Required Documents:
- ✓ Recent statements for all liquid accounts
- ✓ Investment account statements
- ✓ Retirement account documentation
- ✓ Documentation of asset ownership
Income Calculation: Total liquid assets divided by loan term to determine monthly qualifying income
Learn more about Asset-Based Loans →DSCR Investment Loans
Required Documents:
- ✓ Current lease agreement (if tenant-occupied)
- ✓ Rent schedule or market rent analysis
- ✓ Property appraisal with income approach
- ✓ No personal tax returns required
Qualification: Property rental income must meet or exceed 1.0x monthly PITIA payment
Learn more about DSCR Loans →P&L Statement Loans
Required Documents:
- ✓ CPA-prepared profit & loss statements (12-24 months)
- ✓ CPA certification letter
- ✓ Business license
- ✓ Bank statements showing business activity
Requirement: Must have CPA relationship and 2+ years self-employment in same industry
Learn more about Self-Employed Options →Property Requirements
Eligible Property Types:
- ✓ Single-family residences
- ✓ Condos (warrantable and non-warrantable)
- ✓ Townhomes
- ✓ 2-4 unit properties
- ✓ PUDs (Planned Unit Developments)
- ✓ Multi-family (5+ units with commercial program)
- ✓ Mixed-use properties (residential portion)
Property Condition:
- • Must be habitable and in good repair
- • Appraisal required (full or desktop)
- • No major safety issues or deferred maintenance
- • Some renovation loan options available
- • Rural properties acceptable in most programs
Loan Amount Limits:
- • Most programs: $100,000 - $3,000,000+
- • Jumbo Non-QM options available
- • Portfolio loans may exceed $3M
- • Varies by lender and program
Credit Event Waiting Periods
Non-QM loans offer more flexible timelines for borrowers recovering from credit events compared to conventional loans:
| Credit Event | Conventional Loan | Non-QM Loan |
|---|---|---|
| Bankruptcy (Chapter 7) | 4 years minimum | 2-3 years (1 year possible) |
| Bankruptcy (Chapter 13) | 2-4 years minimum | 1-2 years (during or after) |
| Foreclosure | 7 years minimum | 2-3 years |
| Short Sale | 4 years minimum | 1-2 years |
| Deed-in-Lieu | 4 years minimum | 2 years |
Important Considerations:
- • Waiting periods vary by lender and specific circumstances
- • Extenuating circumstances may reduce waiting periods
- • Re-established credit is essential
- • Larger down payments may be required
- • Letter of explanation detailing circumstances required
Reserve Requirements
Primary Residence
3-6 months
Liquid reserves of PITIA payments required after closing
Second Home
6-9 months
Higher reserves for vacation or seasonal properties
Investment Property
6-12 months
Additional reserves for multiple investment properties
What Counts as Reserves:
- ✓ Checking and savings accounts
- ✓ Money market accounts
- ✓ Retirement accounts (60-70% of balance)
- ✓ Investment accounts (stocks, bonds, mutual funds)
- ✓ Vested portion of 401(k), IRA
- ✓ Gift letters for reserve funds (some programs)
Additional Documentation Requirements
Standard Documents (All Programs):
- ✓ Valid government-issued photo ID
- ✓ Social Security card or verification
- ✓ Proof of current residence
- ✓ Purchase contract (for purchases)
- ✓ Insurance quote
- ✓ HOA documents (if applicable)
- ✓ Divorce decree (if applicable)
- ✓ Bankruptcy discharge (if applicable)
Self-Employed Specific:
- ✓ Business license (active)
- ✓ Articles of incorporation/LLC docs
- ✓ Evidence of 2+ years business history
- ✓ Business bank statements
- ✓ Client contracts or invoices
- ✓ CPA letter (for some programs)
Compensating Factors
Compensating factors can strengthen your application and may allow for more flexible guidelines:
Larger Down Payment
Putting down 25% or more demonstrates financial commitment and reduces risk
Substantial Reserves
Having 12+ months of reserves shows financial stability
Strong Credit History
700+ credit score with clean recent payment history
Stable Business History
5+ years of successful self-employment in same field
Increasing Income Trend
Documented income growth over past 2-3 years
Previous Homeownership
History of successful mortgage management
Common Application Issues
While Non-QM loans are flexible, certain factors may complicate approval or result in denial:
⚠️ Red Flags:
- • Recent multiple late payments (within 12 months)
- • Unexplained large deposits
- • Insufficient business history (less than 2 years)
- • Declining income trend
- • Negative bank account balances
- • Outstanding tax liens or judgments
- • Recent overdrafts or NSF fees
- • Inability to verify income sources
✓ How to Address Issues:
- • Provide detailed letter of explanation
- • Document extenuating circumstances
- • Show resolution of issues
- • Demonstrate current financial stability
- • Offer additional compensating factors
- • Consider larger down payment
- • Build additional reserves
- • Work with experienced Non-QM lender
Next Steps: Getting Started
1. Pre-Qualification
Discuss your situation with our Non-QM specialists to determine the best program fit
Call 480-330-17242. Document Preparation
Gather required documentation based on your chosen program type
View process guide3. Application Submission
Submit your application and receive approval decision typically within 2-3 business days
Apply onlineRelated Resources
Questions About Non-QM Requirements?
Our experienced team can evaluate your specific situation and determine your qualification options.
Or visit our main Non-QM Loans page for program options