Arlington offers the best of both worlds: big-league entertainment in the heart of the Metroplex and quieter neighborhoods with a strong small-business energy. With thriving trades, healthcare, logistics, and creative industries, many Arlington buyers earn income that doesn’t fit a traditional W-2 box. That’s where Non-Qualified Mortgage (Non-QM) loans shine: they let you prove your ability to repay with real-world documentation that reflects how you actually earn.
A Non-Qualified Mortgage is a well-underwritten home loan that doesn’t follow the rigid “Qualified Mortgage” standards set by Fannie Mae, Freddie Mac, or government programs. Instead of a single income formula, Non-QM programs use alternative documentation, like bank statements or property cash flow, to verify you can comfortably manage your payment. You still document income, assets, and credit; you just do it in a way that matches your financial reality.
Before you choose, it’s helpful to know the common Non-QM paths available in Arlington. Each program below is explained in plain English, allowing you to determine which one best fits your needs quickly.
If you’re a contractor, gig worker, or business owner, a Bank Statement Loan lets you qualify using 12–24 months of personal or business bank statements. Underwriters analyze average deposits (minus a reasonable expense factor for business statements) to calculate income; no W-2s or complete tax returns required. This is ideal when write-offs lower your taxable income but your cash flow is strong.
With an Asset-Qualifier mortgage, substantial, verifiable assets can serve as a substitute for traditional income. Lenders use your liquid assets, retirement funds, or investment accounts and apply a formula to convert them into qualifying income. It’s a suitable option for retirees, high-savings households, or investors who prefer to live off their assets rather than a paycheck.
A DSCR loan primarily qualifies based on the property’s cash flow, rather than your personal income. Lenders compare the expected monthly rent to the monthly housing expense (PITI/HOA). If the ratio meets the program’s minimum (often around 1.0–1.25x, program-dependent), you can qualify without full tax returns. Perfect for building an Arlington rental portfolio or refinancing an existing one quickly.
If you receive 1099 income, sales, consulting, or seasonal work, you can use your 1099 statements (typically the last 1–2 years) as your primary income proof. Underwriting converts those statements to a qualifying income figure, recognizing your actual earning pattern without forcing you into W-2 boxes.
With a P&L mortgage, your CPA-prepared year-to-date profit and loss statement (often accompanied by a balance sheet) forms the backbone of income verification, sometimes supplemented by a few months of bank statements. This is common for established businesses that keep clean books but want to avoid the friction of full tax-return underwriting.
Foreign National programs help non-U.S. citizens purchase or invest in Arlington real estate. You’ll document your passport/visa, foreign credit, or reference letters, as well as your assets/reserves. Income can be verified through international banking or employment documentation. It’s a streamlined path for global buyers attracted to the DFW market.
While guidelines vary by lender and program, you’ll generally see:
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Q: Are non-QM loans more expensive than traditional mortgages?
A: Non-QM loans often come with slightly higher interest rates and fees to compensate for the increased risk to the lender. However, for a borrower who can’t qualify for a conventional loan, the benefits of homeownership often outweigh the higher cost.
Q: Do I need a good credit score to get a non-QM loan?
A: While credit requirements are often more flexible than for conventional loans, a good credit score is still crucial. Lenders typically look for a FICO score of 620 or higher, with better rates available for higher scores.
Q: Can I use a non-QM loan for an investment property?
A: Absolutely. Non-QM loans, particularly DSCR loans, are a popular and effective way for real estate investors to finance new properties, as they focus on the property’s potential income rather than the investor’s personal finances.
Q: How much of a down payment do I need for a non-QM loan?
A: Down payment requirements vary by program and lender, but they are generally higher than for traditional mortgages. A down payment of 10% to 20% is typical, with some programs requiring up to 25% or more, especially for investment properties.
If you’re an Austin entrepreneur, investor, or buyer with an unconventional financial profile, a non-qualified mortgage is the solution you’ve been looking for. Our team of experienced mortgage professionals understands the unique Austin market and can help you navigate the various non-QM programs to find the perfect fit for your needs. Contact us today at (877) 280-4833 to discuss your options and take the first step toward securing your dream home or investment property in Austin, Texas.
