Non-QM Loans

Non-QM loans, also known as non-qualified mortgages, provide homeowners who may not fit within the traditional lending guidelines for reasons related to income, employment, or credit with purchase and refinancing opportunities.  Non-QM loans fill the gap between conventional and complex mortgage financing by allowing lenders to qualify borrowers based on alternative documentation.


What is a Non-QM Loan?

A Non-QM loan does not meet all the guidelines set forth by the Consumer Financial Protection Bureau’s (CFPB) rules. Typically, borrowers who qualify for this loan type have higher debt-to-income ratios, interest-only loan programs, and irregular income. Non-QM loans provide greater underwriting flexibility, allowing homeowners access to more financing solutions.


What is the Difference Between a Qualified vs. Non-Qualified Mortgage?

A Qualified Mortgage (QM) meets the guidelines set forth by the CFPB, whereas a Non-QM loan does not. The main differences between Qualified and Non-Qualified mortgages include:

Income and Employment Documents

Qualified mortgages require the borrower to have stable and consistent income, such as a traditional salary. Borrowers may be required to submit pay stubs, tax returns, and employment verification documents to show stability. View our mortgage checklist on documents needed for a mortgage pre-approval to better prepare! On the other hand, a borrower applying for a Non-QM program will have to provide alternative documentation to showcase their income instead of tax returns.

Debt-to-Income Ratios

Qualified mortgages typically require the borrower to have a debt-to-income ratio of below 43%. Thus, if your ratio exceeds 43%, you may qualify for a Non-QM loan. Mortgage lenders evaluate your debt-to-income ratio to determine how much additional debt you can handle based on your monthly cash flow.

Interest-Only Loan Feature

Interest-only loans may be considered riskier than traditional mortgages. Thus, qualified mortgages may not offer interest-only programs.


Who May Benefit From a Non-QM Loan?

Self-employed borrowers

Those with irregular or inconsistent income

Real estate investors
Those with money tied up in properties rather than liquid cash in the bank

Prime borrowers
Borrowers with low credit scores

Foreign Nationals
International buyers looking to purchase or invest in real estate in the U.S.

Borrowers with significant liquid assets
Those with large amounts of cash in the bank, investment, or retirement accounts but do not show steady monthly income

Independent contractors or freelancers
Borrowers with irregular or inconsistent income

GuardHill’s Non-QM Loan Programs

GuardHill offers many Non-QM purchase and mortgage refinance programs to help borrowers from all walks of life achieve their mortgage financing goals. Some of our Non-QM purchase and refinance programs include:

Bank Statement Program

This program allows the self-employed borrower to qualify for the loan based on personal or business bank statements rather than personal tax returns.

Investment Property Cash-Flow

This program qualifies the borrower based on the cash flow or gross rent generated by an investment property instead of personal tax returns.

Foreign National Loans

Buyers purchasing property in the U.S.

Asset Depletion Mortgages

This program qualifies borrowers based on their assets (stocks, bonds, cash, etc.) rather than their tax returns.


Why Choose GuardHill?

GuardHill has over 31 years of mortgage financing experience and specializes in providing standard and out-of-the-box financing solutions for our customers. GuardHill works with numerous investors and lenders and offers various loan programs to provide borrowers with the best financing solutions possible.