Royal Mortgage›Loan programs›Non-QM
The one door
There is one place to apply, and this is it.
Takes you to our secure application site at my1003app.com.
Non-QM
A tax return is a tax strategy, not a description of what you earn.
Agency underwriting reads line 31 of a Schedule C and calls it your income. If you are self-employed, own property, live on distributions, or had one bad year in an otherwise good decade, that number describes almost nothing about your ability to pay a mortgage.
Non-QM programs read the business instead of the return. It is a different documentation route, not a shortcut and not a looser standard — the file still has to hold up, and it is often read harder than an agency file.
The programs
Each one exists for a borrower the standard documentation route does not describe.
Bank statement
Income is calculated from deposits into your business or personal accounts over a defined period, rather than from your tax return. Built for the self-employed borrower whose write-offs are legitimate and whose cash flow is obvious.
Profit and loss
A P&L prepared by your accountant is used to establish income, sometimes with fewer statements required. For businesses whose banking is spread across accounts.
1099 income
For contractors and commissioned earners: the 1099s themselves establish income, without the write-off arithmetic that flattens a Schedule C.
DSCR — investment property
The property qualifies, not you. Debt service coverage compares the rent the property produces to the payment it must carry. No personal income documentation. This is the workhorse of the rental portfolio.
Asset depletion
A qualifying income is derived from liquid assets you hold. For retirees, recent exits, and anyone whose balance sheet tells the truth their paycheck does not.
After a credit event
Programs that will consider a file sooner after a bankruptcy, foreclosure or short sale than agency guidelines allow, at terms that reflect the risk honestly.
Foreign national and ITIN
For borrowers without traditional United States credit or a Social Security number, where the program and the property both permit it.
Interest-only and short-term
Structures built for cash flow, for a defined holding period, or for a bridge between two transactions.
Who ends up here
Six situations, and every one of them is ordinary.
The self-employed
Your accountant did their job and now your income looks like nothing.
The landlord
Five properties in and agency counting rules have run out of room.
The recently exited
You sold the business. There is no W-2 and there is a great deal of money.
The rebuilt
The credit event was real, it was years ago, and everything since has been clean.
The commissioned
The income is large, lumpy, and two years of averaging does not describe this year.
The declined
Somebody already said no. We can read the file again and tell you what we see.
When non-QM is the wrong answer
Four situations where we will tell you to go the other way.
- A conventional or government loan already fits your file. If your documentation works on the agency shelf, that is the shelf to use. Non-QM exists for files that do not fit, and it is priced for that.
- You are hoping for a looser standard. There is not one here. The documentation route changes; the requirement that the file makes sense does not.
- The larger down payment and the reserves are not there. More equity and money left after closing are how these lenders get comfortable. Without them, this is not the route.
- Waiting is genuinely better for you. If a few months of seasoning or a rebuilt score puts you on an agency loan, we will say so, even though it means we wait too.
What to have ready
Which of these you need depends on the route. We will tell you which one before you gather.
- Business or personal bank statements, for the number of months the program asks for
- A profit and loss statement from your accountant, if the route uses one
- 1099s, if the income arrives that way
- For a rental file: the lease, the rent roll, and what the property actually collects
- Recent statements for the accounts the down payment and the reserves come from
- A plain-words explanation of any credit event, with the dates
The honest trade-off
Non-QM is not a loophole. It is a different price for a different risk.
- The rate is usually higher than an agency loan for the same borrower on paper. That difference is what buys the flexibility.
- The down payment is usually larger. More equity is how the lender gets comfortable.
- Reserves matter more. Months of payments in the bank after closing carry real weight.
- Some programs carry a prepayment penalty, particularly on investment property. You will be told before you sign, not after.
- Documentation is different, not lighter. Every file still goes through underwriting.
- Many of these are a bridge, not a destination. Two years of clean history on a non-QM loan often refinances into an agency loan. We will plan that exit at the start.
How a non-QM file runs here
Five moves, in this order.
- Describe the situation in plain words Not the tax return — the business. How you get paid, where it lands, and what you actually keep.
- Choose the documentation route Bank statement, P&L, 1099, DSCR, assets. The route is chosen for your file, and we say why.
- The lender read We shop our lender panel and then explain what we found, including the terms attached to it and any prepayment penalty, before you commit to anything.
- Documents, requested in order One list at a time, as the file needs them.
- Underwriting, with a person on it A Royal Mortgage underwriter reviews and signs. If something changes on the file we tell you, and the exit plan is written down at the start.
Non-QM next to an agency loan
The same borrower, read two different ways.
- What proves your incomeDeposits, a P&L, 1099s, or the property's own rent
- The standardDifferent documentation, not lighter underwriting
- Down paymentUsually larger
- ReservesCarry real weight
- Prepayment penaltyPossible, particularly on investment property
- The planOften a bridge, with the exit planned at the start
The one door
A decline is one lender's answer.
Bring the file here for a second read. One application, one place — and if the honest answer is not yet, you will hear that too.
Any question on this page can go straight to Royal Ai. The gold bubble in the corner takes questions in plain words.