Non-QM is not subprime. It is the part of the market where a borrower's income is real but does not fit a 1040 — and where agency underwriting runs out of road.
A Non-QM loan is written outside the qualified mortgage box, which lets the lender document income, assets and property cash flow in ways agency guidelines do not allow. The borrower still has to show the ability to pay; the evidence just looks different.
Through the wholesale channel, Defy writes cradle-to-grave Non-Agency: bank statement and P&L income for self-employed borrowers, asset depletion for borrowers whose balance sheet carries them, investor DSCR that qualifies on the property instead of the person, foreign national and ITIN programs, 5-9 unit and mixed-use, second liens and blanket portfolio loans.
Brokers send us these files because the alternative is telling a good borrower no. We would rather you send the scenario and let the pricing engine answer.
The Non-Agency program qualifies self-employed borrowers on 12 or 24 months of personal, business or co-mingled bank statements, without tax returns or a 4506-C. Income is analyzed under three methods: a 50% standard expense ratio, a third-party expense letter, or a third-party prepared P&L.
Self-employed borrowers with 25% or more ownership can also qualify on P&L only, on 1099 income treated as self-employment, or with one-year self-employment options.
Some borrowers are qualified by what they own rather than what they earn. Asset depletion converts eligible liquid assets into qualifying income, and Non-Agency files can also include assets alongside other income types.
Our asset depletion guide walks through which accounts qualify, the haircut applied to each asset type and the 60, 84 and 120-month divisor math that decides the approval.
DSCR loans qualify on the property's rental cash flow, with no personal income, employment or DTI calculation. They are business purpose loans on investment property only.
Foreign National DSCR qualifies non-US-resident investors on rental cash flow with no US credit report required. ITIN loans serve borrowers with an Individual Taxpayer Identification Number on full doc or alt doc income.
Not every borrower should refinance a low-rate first. Closed-end seconds let them tap equity behind it, and blanket loans let an investor consolidate a portfolio into one note.
These programs are for borrowers with real income, real assets or real cash flow that a conventional file cannot see. Investor business purpose lending is available in 39 states, and primary and second home transactions in AL, CA, CO, FL, GA, TN and TX; check the lending area map before you quote a property.
No. Non-QM covers borrowers whose income is real but documented outside agency rules — bank statements, P&L, assets or property cash flow — rather than borrowers with weak credit.
12 or 24 month bank statements, CPA P&L, 1099, asset depletion and full doc.
Up to 90% LTV on purchase with no MI for qualifying borrowers, with a 660 minimum score and loans up to $10M.
No. Foreign National borrowers qualify off rental cash flow alone, and no US credit report is required.
Yes. The Non-Agency program covers primary residence, second home and investment property.
Run it in PriceIQ inside DEFY ONE with guest access, or send it to the Deal Desk for structuring help from an underwriter.