🆚 Non-QM vs. Traditional Mortgages: What’s the Difference?
Flexible financing for real life.
Not every borrower fits inside the tight credit boxes of conventional, FHA, or VA loans — and that’s okay.
Whether you’re self-employed, an investor, recently went through a credit event, or have non-traditional income, there’s a solution designed for you:
👉 Non-QM loans (short for non-qualified mortgage).
Let’s break down what they are, how they work, and who they’re built for — because just because you don’t fit a formula doesn’t mean you shouldn’t own a home or build wealth.
🧠 What Is a Non-QM Loan?
A Non-QM loan is a mortgage that does not meet the strict income or underwriting guidelines of traditional loans (Fannie Mae, Freddie Mac, FHA, etc.).
But that doesn’t mean it’s risky or subprime — it just means the qualification method is different.
Instead of relying solely on W-2s, tax returns, or a perfect credit history, non-QM lenders look at:
- Bank statements (12–24 months)
- 1099 income
- Asset depletion (using liquid assets instead of income)
- Rental income (DSCR)
- Recent credit history, not older events
📘 These loans are designed for people with real income — just not the kind that fits neatly into a traditional box.
✅ Who Are Non-QM Loans For?
You may be a perfect candidate for a non-QM loan if you’re:
👤 Self-Employed or a Business Owner
Use bank statements instead of tax returns — and show your true cash flow, not your deductions.
📈 Investor with Rental Properties
Use DSCR loans to qualify based on property cash flow — not your personal income.
💼 1099 Contractor, Freelancer, or Consultant
Qualify using your 1099s or bank deposits — not W-2s or employer verifications.
💸 Asset-Rich but Income-Light
Use your retirement, investment, or savings accounts to qualify without needing employment.
🧨 Had a Credit Event in the Past
You may still qualify just 1–2 years after a bankruptcy, foreclosure, or late payments.
🔍 What Makes a Loan “Non-QM”?
To be considered a Qualified Mortgage (QM) under federal guidelines, a loan must:
- Use standard documentation (W-2s, pay stubs, etc.)
- Have a strict 43% max debt-to-income ratio
- Follow all QM rules for risk and documentation
Non-QM loans fall outside those rules — but still meet investor, lender, and compliance standards.
They’re often portfolio loans, meaning they’re held or sold by private investors — not backed by Fannie or Freddie.
💬 Common Misconceptions
❌ “Non-QM means subprime.”
✅ Not at all. These are fully underwritten loans with fair rates and terms — just flexible documentation.
❌ “It’s only for people with bad credit.”
✅ Many non-QM borrowers have strong credit — they just don’t show income the traditional way.
❌ “It’s too complicated.”
✅ With the right lender, non-QM loans can close just as smoothly as any other.
🏢 Why PRMI?
As a direct lender, PRMI offers:
- A wide range of non-QM loan products (bank statement, DSCR, asset-based, etc.)
- In-house processing and underwriting — so we control the timeline
- Experienced loan officers who understand self-employed, investor, and unconventional profiles
We don’t force you to fit the system — we build a loan strategy around you.
👇 Think You Might Be a Non-QM Candidate?
Let’s walk through your income, credit, and goals — and show you your loan options without judgment or red tape.