Who should consider a Non-QM loan?

Non-QM loans are designed for self-employed borrowers, real estate investors, 1099 contractors, high-net-worth retirees, foreign nationals, recent credit-event borrowers (bankruptcy, foreclosure, short sale), and anyone whose tax returns understate their true ability to repay. If a conventional or FHA lender has declined you because your income documentation is unconventional — but you have strong assets, reserves, credit, or cash flow — Non-QM is usually the answer.

Are Non-QM loan rates higher than conventional?

Yes. Non-QM rates typically run 0.75%–2.0% above conventional rates because lenders accept more documentation flexibility in exchange for a risk premium. The exact spread depends on the program (DSCR is generally priciest, P&L often lowest), credit score, LTV, and reserves. The right comparison is not Non-QM vs. conventional — it is Non-QM vs. not buying the property at all.

Do Non-QM loans require a larger down payment?

Usually yes. Most Non-QM programs require 10–25% down depending on the product, credit score, and property type. DSCR loans typically require 20–25% for purchase; bank statement loans can go as low as 10% with strong credit. Down payment requirements scale with credit and DTI strength.

Can I refinance from a Non-QM loan into a conventional loan later?

Yes. Many Cascada clients use a Non-QM loan to purchase or pull cash out today, then refinance into a conventional loan in 1–3 years once their tax returns, seasoning, or credit profile catches up. Non-QM loans have no prepayment penalty on owner-occupied properties; investment property programs may carry a 1–5 year prepay rider depending on the rate buy-down chosen.

How long does a Non-QM loan take to close?

Most Non-QM loans close in 21–30 days, comparable to or faster than conventional loans. DSCR loans are often the fastest because there is no income documentation to chase. Bank statement and P&L programs add a few days for the income calculation review.

Which Non-QM program is right for me?

It depends on your borrower profile. If you are a real estate investor financing a rental: DSCR. If you are self-employed with heavy write-offs: bank statement or P&L only. If you are paid mostly on 1099: a 1099 program. If you are retired with large investment accounts: asset utilization. Most California borrowers qualify for two or three Non-QM programs and the right choice depends on rate, down payment, and how quickly you need to close. We compare every program across 50+ lenders before recommending.

Non-QM Hub

Non-QM Loans in CaliforniaFive programs for borrowers who don't fit the conventional box

Q: What is a Non-QM loan?

A Non-QM (Non-Qualified Mortgage) loan is a mortgage that does not meet the strict Ability-to-Repay rules set by the CFPB for Qualified Mortgages — usually because the income is documented differently (bank statements, rental income, assets, P&L) rather than through traditional W-2s and tax returns. Non-QM loans are fully legal, federally regulated, and originated by mainstream wholesale lenders. They simply give underwriters more flexibility to evaluate creditworthy borrowers whose income does not fit the conventional box.

Non-QM (Non-Qualified Mortgage) loans use alternative documentation — bank statements, rental income, P&L, 1099s, or liquid assets — instead of W-2s and tax returns. Designed for self-employed borrowers, real estate investors, and high-net-worth Californians.

Quick Answer

What is a Non-QM loan?

A Non-QM (Non-Qualified Mortgage) is a mortgage that uses alternative income documentation — bank statements, DSCR (rental income), P&L statements, 1099s, or liquid assets — instead of traditional W-2s and tax returns. Non-QM loans are fully legal, federally regulated, and originated through mainstream wholesale lenders. Cascada Mortgage Advisors offers five Non-QM product families in California: Bank Statement, DSCR, P&L Only, 1099 Income, and Asset Utilization.

— Cascada Mortgage Advisors

When a Non-QM Loan Is the Right Tool

Conventional, FHA, and VA loans qualify borrowers using two years of W-2s or tax returns and a debt-to-income ratio. That works for salaried employees with simple finances — and fails for everyone else. Roughly 16 million Californians are self-employed, paid on 1099, own rental property, or live off investment income. For most of them, the numbers on a tax return have very little to do with what they actually earn.

Non-QM loans look at income the way an underwriter would if they were looking at the whole picture: actual deposits, actual rental income, the CPA's clean P&L, the brokerage account balance. The trade-off is a modest rate premium (typically 0.75%–2.0% above conventional) and a slightly larger down payment. For the right borrower, that is a small price to actually close.

Self-employed with 20%+ business write-offs

Real estate investor scaling past 10 financed properties

1099 contractor with strong gross income but lean net

Retired with large brokerage / IRA balances, low income

Recent credit event (BK, short sale) outside conventional seasoning

Foreign national buying California real estate

The Five Non-QM Programs We Offer

Each program targets a specific borrower profile. Most California borrowers qualify for two or three — we compare every option across 50+ wholesale lenders before recommending.

Bank Statement Loans

For: Self-employed W-2-less borrowers

Qualify using 12 or 24 months of personal or business bank deposits instead of tax returns. Built for owners, freelancers, and 1099 contractors whose tax returns understate true cash flow due to write-offs.

Bank Statement details

DSCR Loans

For: Real estate investors

Qualify on the property's rental income — not your personal income. Close in an LLC, scale to unlimited financed properties, finance long-term rentals or Airbnb/STR. The workhorse program for California portfolio investors.

DSCR details

P&L Only Loans

For: Self-employed with a CPA

Qualify off a CPA-prepared profit & loss statement covering the most recent 12–24 months. Lighter documentation than full bank statement programs when your business books are clean and your CPA can sign off.

Talk to us — program details vary by lender.

1099 Income Loans

For: Independent contractors paid on 1099

Qualify using gross 1099 income (with a fixed expense factor) instead of net Schedule C. Ideal for high-earning consultants, sales reps, and real estate agents whose tax returns show heavy deductions.

Talk to us — program details vary by lender.

Asset Utilization Loans

For: High-net-worth borrowers and retirees

Qualify by amortizing liquid investment and retirement assets into a monthly income equivalent. No employment or income documentation required — just verifiable assets in qualifying accounts.

Asset Depletion details

Which Non-QM Loan Is Right for You?

Are you buying or refinancing a rental property?

Start with DSCR. You'll qualify off the property's rental income — no personal income documentation. If the DSCR doesn't pencil and you're self-employed with strong deposits, bank statement is the fallback.

DSCR Loan details

Are you self-employed and the property is your primary residence?

Bank statement loans are usually the best fit. P&L only is lighter documentation if your CPA can sign a current statement. 1099 programs work if most of your income comes through 1099s rather than business deposits.

Bank Statement details

Are you retired or near-retired with significant investment assets?

Asset utilization (also called asset depletion) qualifies you by converting liquid assets into a monthly income equivalent over the loan term. Common for La Jolla, Rancho Santa Fe, and Coronado retirees buying with $2M+ in brokerage accounts.

Asset Depletion details

Had a recent bankruptcy, foreclosure, or short sale?

Several Non-QM programs allow as little as 1 day out of BK or 12 months out of foreclosure with compensating factors. The right product depends on credit score, reserves, and down payment.

Non-QM Loan FAQs

Not sure which Non-QM loan fits?

Tell us about your income, the property, and the goal. We'll compare every applicable program across 50+ California wholesale lenders and bring back the two or three best options — usually within one business day.