The Qualified Mortgage (QM) standard was established by the CFPB after the 2008 financial crisis to define safe lending practices. Loans that meet QM criteria receive legal protections for the lender (Safe Harbor or Rebuttable Presumption). Loans that don’t meet QM criteria are non-QM — riskier for the lender, but expanding access to borrowers who don’t fit the conventional template.
Common non-QM loan types
- Bank Statement Loan — qualifies self-employed borrowers based on 12-24 months of business or personal bank deposits, instead of tax returns
- DSCR Loan (Debt Service Coverage Ratio) — qualifies investor borrowers based on rental property cash flow, not personal income
- 1099 Income Loan — qualifies borrowers based on 1099 forms (gig economy, contract workers) instead of W-2s or tax returns
- Asset Depletion Loan — qualifies borrowers based on liquid asset reserves, calculated as if drawn down monthly to support the mortgage payment
- ITIN Loan — for borrowers with Individual Taxpayer Identification Number instead of SSN; serves immigrants ineligible for conventional loans
- P&L Loan — qualifies self-employed borrowers based on profit-and-loss statements rather than tax returns
Non-QM market context
Non-QM origination volume has grown rapidly as the gig economy expanded and as more borrowers fall outside the QM template. Estimated non-QM volume exceeded $50B in 2025 with continued growth into 2026. Non-QM loans typically price 1.5-3% above conventional rates and carry stricter LTV limits (75-80% typical for purchase, 70% for refi).
Who originates non-QM
Most non-QM is originated by mortgage brokers and IMBs (independent mortgage banks) who specialize in working with non-conventional borrowers. Banks and credit unions tend to focus on conventional and government-backed loans where the risk profile and regulatory treatment are simpler.
