A mortgage that doesn't meet the Consumer Financial Protection Bureau's Qualified Mortgage standards, offering flexible underwriting for non-traditional borrowers.
Full Definition
A Qualified Mortgage (QM) is a loan that meets specific ability-to-repay criteria set by the CFPB. Non-QM loans fall outside these standards and allow lenders to use alternative income documentation — bank statement programs for self-employed borrowers, asset depletion, 1099-only income, or DSCR for investors. Because they don't follow standard guidelines, non-QM loans can't be sold to Fannie Mae or Freddie Mac and are typically held or sold to private investors. They carry higher rates than conventional loans to compensate for the added risk but fill an important gap for borrowers who are creditworthy but don't fit traditional income documentation requirements.
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