Non-QM requirements are often described vaguely, which helps nobody. This page lays out the backbone every Non-QM file shares, then the specific documentation each major program needs, so you can assemble a complete file before you apply rather than after an underwriter asks.
Requirements Every Program Shares
Whatever program you use, a Non-QM lender is answering the same question a conventional lender asks: can this borrower repay this loan? Every file therefore contains:
- A credit report — one hard inquiry, tri-merge across all three bureaus
- Documented income or asset capacity, in whatever form the program accepts
- Verified funds for down payment, closing costs, and post-closing reserves
- A property file — purchase contract, appraisal, insurance quote, and title work
- Entity documentation if the loan closes in an LLC
What changes program to program is the income piece. Everything else is broadly consistent.
Credit Score
Most Non-QM programs set a minimum FICO somewhere in the 620 to 640 range. Scores above that do not just determine approval; they determine pricing, and the spread between tiers is wide. The gap between a 740 borrower and a 660 borrower on the same deal can be substantial.
A persistent myth worth correcting: Non-QM is not a bad-credit product. It is an alternative-documentation product. The typical Non-QM borrower has good-to-excellent credit and an income structure that conventional underwriting reads incorrectly.
Non-QM programs generally do apply shorter seasoning periods after a credit event — bankruptcy, foreclosure, short sale — than agency guidelines require. If a past event is the obstacle, that is worth raising early.
Down Payment and LTV
Down payment requirements run roughly 15% to 25% across most Non-QM programs, and the specific figure moves with three things:
- Program. Foreign national and asset depletion programs typically require more equity than a straightforward bank statement loan.
- Credit score. Maximum LTV usually steps down as FICO steps down.
- Loan purpose. Purchases allow the highest leverage. Rate-and-term refinances sit below that, and cash-out refinances are typically capped lowest.
Property type matters too. Single-family long-term rentals sit at the friendly end. Two-to-four unit properties, condos, non-warrantable condos, condotels, and short-term rentals all carry tighter leverage or pricing adjustments.
Reserves
Reserves are liquid funds you still hold after closing, measured in months of the full payment including taxes, insurance, and HOA. Most Non-QM programs want at least a few months, and the more flexible tiers — sub-1.0 DSCR deals in particular — want considerably more.
This is the requirement borrowers most often miss. If your cash-to-close consumes everything you have, you do not have reserves, and the loan does not fund regardless of how good the property looks.
Documentation by Program
| Program | Core Income Documentation |
|---|---|
| DSCR | Lease agreement or appraiser's market rent schedule; AirDNA-style data for short-term rentals. No personal income documents. |
| Bank Statement | 12 or 24 months of personal or business bank statements, plus proof of business ownership and often a CPA or licensed-preparer letter on expense factor. |
| P&L | A profit-and-loss statement covering 12–24 months, typically CPA-prepared, sometimes paired with a shorter set of bank statements for support. |
| Asset Depletion | Statements for the qualifying liquid accounts, seasoned, with documentation that funds are accessible and unencumbered. |
| Foreign National | Valid passport and visa where applicable, foreign credit reference or bank letters, source-of-funds documentation, and US-based reserves. |
| Interest-Only | Whatever the underlying program requires — interest-only is a payment structure layered on top, not a separate documentation type. |
Property Requirements
The property has to qualify as well as the borrower. Common requirements across investor Non-QM programs:
- The property must be investment or, on owner-occupied programs, an eligible primary or second home — DSCR programs are investment-only
- It must be in habitable, rent-ready condition; significant deferred maintenance can trigger repair requirements before closing
- An appraisal is required, and on rentals it typically includes a rent schedule
- A bindable insurance quote is required, and in high-premium states that quote should come early because it moves the payment
- Unusual property types — condotels, non-warrantable condos, mixed-use, rural acreage — need to be disclosed upfront, not discovered at appraisal
Closing in an LLC
Investor Non-QM programs generally allow entity vesting, which is one of the main structural reasons investors use them. To close in an LLC you will need the formation documents, the operating agreement, evidence of good standing, and a properly authorized signer. The borrower typically signs a personal guarantee.
Form the entity early. Last-minute LLC formation — or an entity formed in the wrong state, or with an operating agreement that does not name the right signer — delays more closings than most borrowers expect.
Where Files Get Delayed
- Insurance quoted late. In Florida, Louisiana, coastal Carolina, and wildfire-exposed California, the premium can change the qualifying math. Quote before you lock.
- Taxes modeled from the seller's bill. Reassessment on sale and the loss of owner-occupied exemptions can raise the tax line sharply in many states.
- Below-market lease with no supporting rent analysis. Without an appraiser-supported market rent, the underwriter uses the lease figure.
- Property mispositioned. A furnished unit rented in short increments is a short-term rental. Declaring it correctly at application avoids a repricing at appraisal.
- Reserves counted twice. Funds used for closing cannot also be reserves.
- Entity paperwork incomplete. See above — this is entirely preventable.
Program parameters differ between lenders and change with market conditions. The figures here describe what is typical across the Non-QM market — your actual terms depend on your scenario, so submit your deal for real numbers.
