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What is a non-QM mortgage?
A non-QM (non-qualified mortgage) is a home loan that does not meet the CFPB's Qualified Mortgage criteria under Regulation Z. It is still underwritten and documented. Non-QM lending serves eligible borrowers whose income, property or loan structure doesn't fit agency or conventional guidelines, such as self-employed borrowers and real estate investors.
For brokers, non-QM is where files that agency underwriting turns down get a second look. A loan can land in non-QM because of how income is documented (bank statements, a P&L, assets), because of its structure (interest-only payments or a term longer than 30 years), or because of the borrower or property type.
Non-QM is not the same as subprime. Many non-QM borrowers have strong credit and large down payments; their paperwork just doesn't match agency rules. Consumer-purpose non-QM loans are still subject to the Ability-to-Repay rule, which is why documentation still matters.
