Non-QM Qualification Guide
How bank statement income is calculated, industry expense ratios, foreign national requirements, and how to document self-employment income for a non-QM loan.
Who Non-QM Loans Are For
Non-QM loans exist because the conventional mortgage system was built around W-2 employees. If your income doesn't fit that mold, conventional lenders either decline you or approve you for far less than you can actually afford.
- Self-employed business owners whose tax returns show write-offs that reduce reported income
- Real estate investors with rental income and complex schedules
- Foreign nationals purchasing U.S. property
- High-net-worth individuals with assets but low documented income
- Borrowers 1–2 years out of a significant credit event (bankruptcy, foreclosure, short sale)
How Bank Statement Loans Calculate Your Income
For self-employed borrowers, lenders look at 12 or 24 months of bank statements and apply an expense ratio to determine qualifying income.
Qualifying income = avg monthly deposits × (1 − expense ratio)
Example: $50,000/mo deposits × (1 − 0.45) = $27,500/mo qualifying income = $330,000/year
Typical expense ratios by industry:
| Industry | Expense Ratio |
|---|---|
| Consulting, coaching, real estate services | 10–20% |
| Professional services (attorneys, CPAs, doctors) | 15–25% |
| Construction and trades | 35–50% |
| Retail and e-commerce | 40–55% |
| Restaurants and food service | 50–65% |
12 vs 24 Months — Which to Choose
- 12 months qualifies on your most recent year. Better if income is growing.
- 24 months averages two years. Better if last year was unusually low or if the lender offers better terms for the longer history.
- Some lenders require 24 months of self-employment documentation even for 12-month bank statements.
What to Have Ready as a Self-Employed Borrower
- 12 or 24 months of complete business bank statements (all pages, all accounts used for the business)
- 12 or 24 months of personal bank statements (if using personal statements)
- Government-issued ID
- CPA letter or business license confirming 2+ years of self-employment
- For large deposits: explanation letters (what was the source — client payment, transfer, etc.)
- Entity documents: articles of incorporation or organization, operating agreement
Foreign National Requirements
- Passport (home country)
- ITIN or acceptance of ITIN-less programs
- Evidence of foreign income (bank statements, employer letters, or tax returns from home country)
- U.S.-based bank account or willingness to open one for closing
- Down payment: typically 30–35% vs 20–25% for U.S. citizens
- Property must be investment — primary residences are more difficult for foreign nationals
Recent Credit Events — How Long to Wait
Non-QM programs offer paths back to financing sooner than conventional:
| Credit Event | Non-QM Wait | Conventional Wait |
|---|---|---|
| Bankruptcy (Chapter 7) | 1–2 years after discharge | 4 years |
| Bankruptcy (Chapter 13) | 1 year into repayment plan | 2 years after discharge |
| Foreclosure | 1–2 years | 7 years |
| Short sale | 1–2 years | 4 years |
Ready to Apply?
No tax returns required. No W-2s. No hard credit pull to start.
Start Your Application →Surge Financial | 954-787-4348 | surge-financial.com