Quick answer
A non-QM loan is a mortgage that doesn’t meet the Qualified Mortgage standards — because of a feature, its price or how income is documented — so the lender doesn’t get QM legal protection. A non-QM consumer loan secured by a home must still satisfy the ability-to-repay rule.
Key facts
Common kinds
- Bank-statement loans for self-employed borrowers, where income is worked out from deposits rather than tax returns. The lender still has to verify it with reliable third-party records.
- Interest-only loans and loans with terms longer than 30 years.
- Loans with high points and fees, above 3% of the loan on larger loans, or priced too far above average rates.
- Asset-based loans that qualify you on savings and investments.
Investor loans such as DSCR loans are often sold under the non-QM label, but a loan for a rental you won’t live in is business-purpose credit outside these consumer rules altogether.
What it means for you
Non-QM isn’t a warning label: plenty of non-QM loans are sound. But no Fannie Mae, Freddie Mac or government standard sets the terms, so rates, down payments and fees vary widely between lenders and are often higher than on a conventional loan. Compare several Loan Estimates line by line. The interest-only mortgages guide and mortgages for the self-employed cover two common cases.
Sources
- CFPB — Longest term allowed on a Qualified Mortgage (Jan 7, 2025)
- CFPB, Federal Register 90 FR 57890 — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold)
- CFPB: What is the ability-to-repay rule?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.