If you’ve been turned down for a traditional mortgage in Lubbock, you’re not alone. You may be self-employed, recently changed careers, or have income that doesn’t fit the boxes lenders require. If a conventional mortgage has ever made you feel like you must prove what you already know, a Non-Qualified Mortgage, or Non-QM home loan, might be a better fit.
Traditional qualified mortgages follow guidelines set by Fannie Mae and Freddie Mac. They require specific debt-to-income ratios, documented employment history, and standardized income verification. Non-QM loans take a different approach.
A Non-QM loan is a home loan that doesn’t meet the strict government guidelines set by Fannie Mae or Freddie Mac. These loans are for people whose finances don’t fit the standard mold, such as small business owners, real estate investors, retirees, or independent contractors with high income that doesn’t show up in traditional ways. Instead of focusing on tax returns or W-2s, Non-QM lenders look at your overall financial health: cash flow, bank deposits, assets, and property income.
Lubbock has a unique real estate market. Between Texas Tech’s growing influence, the city’s expanding job market, and the strong independent business community, many buyers here earn income in unconventional ways.
Income can be seasonal. Expenses can be substantial. Cash flow can be strong even when taxable income looks modest. Traditional underwriting sometimes struggles with these realities. Non-QM loans are for borrowers who can repay but need alternative ways to document income or qualify based on assets or property cash flow.
Non-QM loans are for all of them. They offer real-world solutions in a lending environment that is often too rigid.
Non-QM programs in Texas are especially helpful for Lubbock homebuyers who want to purchase a primary residence or build a local investment strategy.
Bank statement loans are among the most popular Non-QM programs. Instead of requiring tax returns or pay stubs, these loans use 12 or 24 months of personal or business bank statements to calculate income. They look at your deposits to determine your average monthly income. If you run a successful business but show minimal taxable income due to write-offs, this program levels the playing field.
The borrowers who benefit most are business owners, contractors, gig workers, commissioned sales professionals, and anyone whose income aligns with the bank’s standards, even if it isn’t fully documented. Eligibility often includes a solid recent payment history, credit in the mid-600s or better, a down payment typically higher than conventional loans, and enough reserves to show you can handle normal life events without stress. The benefit is that your loan file reflects your actual cash flow, not a tax snapshot that misses the full picture.
Maybe you’re recently retired, living off investments, or have substantial savings but no traditional income. Asset-depletion loans calculate your qualifying income based on your liquid assets, such as savings accounts, retirement funds, or investment portfolios.
The lender reviews verified liquid assets, applies standard haircuts and seasoning rules, and calculates a monthly income by allocating a portion of those assets over a set term. This approach fits buyers who have built wealth but don’t show a typical W-2 income stream. It can work for retirees, high-net-worth buyers, entrepreneurs after a business sale, or anyone who wants to qualify without relying on tax returns.
Eligibility typically centers on the size and stability of your assets, your creditworthiness, down payment, and reserve requirements. The benefit is clear: you can qualify based on what you have, not just what you earn each month.
Debt Service Coverage Ratio loans are designed for investment properties. If you’re buying a rental property in Lubbock, whether a duplex near campus or a single-family home in a growing neighborhood, DSCR loans focus on one thing: does the property’s rental income cover the mortgage payment?
Your personal income does not factor into the equation. The lender evaluates current or projected rental income, compares it to total monthly debt obligations (the DSCR ratio), and if the numbers work, approves the application. A DSCR of 1.0 means the rent exactly covers the payment. Most lenders prefer a 1.25 or higher ratio, meaning the rent exceeds the payment by at least 25%.
Eligibility typically includes documented 1099 history, stable deposits, credit in a workable range, down payment requirements that vary by lender, and reserves that show stability. The benefit is that the program matches your reality; you are evaluated using the income format you actually use.
If you work as an independent contractor, receiving 1099 forms instead of W-2s, you know the income documentation challenge. You might earn good money as a consultant, freelancer, or contract worker, but explaining that to a traditional lender can feel like speaking different languages.
A 1099 home loan uses one to two years of 1099 forms, sometimes with year-to-date documentation, to calculate qualifying income without requiring full tax returns in every case.
This option works well for independent contractors, tradespeople, consultants, sales professionals, and gig workers. Eligibility typically includes documented 1099 history, stable deposits, credit in a workable range, down payment requirements that vary by lender, and reserves that show stability. The benefit is that the program matches your reality: you are evaluated using the income format you actually use.
If you run a business and your bookkeeping is organized, a Profit and Loss statement loan can be a smart route. Instead of full tax returns, lenders can use a current P&L prepared by your CPA or tax professional, often supported by bank statements, to verify income and expenses in real time.
This is especially valuable if your business is growing or if your most recent tax year does not reflect your current performance. It also helps if you’ve had a transition year, changed industries, or invested heavily in the business and want your mortgage qualification to reflect current performance. Eligibility often includes a CPA-prepared P&L that aligns with bank activity, reasonable credit, down payment, and reserves. The benefit is that the loan file reflects your current status, not last year’s.
Each of these Non-QM programs serves a specific need, and the right choice depends on your circumstances. What they all share is flexibility that recognizes the changing nature of work and wealth in America. You shouldn’t have to put your life on hold or miss out on Lubbock’s affordable housing market just because your income doesn’t arrive by direct deposit from an employer every two weeks.
Non-QM loans are flexible, but still responsible. Expect lenders to look for a believable, well-documented story. Credit requirements vary by program, but many start around the low to mid-600s, with stronger scores improving terms. Down payments often range from 10 to 30 percent, depending on the program and whether the home is owner-occupied or an investment property. Reserves are common, usually several months of payments. Documentation changes based on the loan type: bank statements for bank statement loans, verified assets for asset depletion, rent schedules and appraisals for DSCR, 1099 forms for contractor income, and CPA-prepared P&L statements for business owners.
Q: How much down payment do I need for a Non-QM loan?
A: Most Non-QM loans require between 10% and 20% down, though some programs may go as low as 10% for primary residences and others may require 20-25% for investment properties or unique situations.
Q: Do Non-QM loans have higher interest rates?
A: Yes, they can be slightly higher than traditional loans, mainly because they carry more flexible qualification standards. But lenders often adjust rates based on down payment size, credit strength, and overall financial stability.
Q: Can you buy a primary residence in Lubbock with a Non-QM loan?
A: Yes. Many Non-QM programs are available for primary homes, and they’re often designed specifically for self-employed buyers who need alternative income documentation.
Q: Can I refinance a Non-QM loan later?
A: Absolutely. Many buyers use a Non-QM loan to purchase a home, then refinance into a conventional loan once their income or financial profile aligns better with standard guidelines.
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Ready to explore your Non-QM financing options? Whether you’re self-employed, building an investment portfolio, or have income that doesn’t fit traditional lending boxes, there is likely a program that works for your situation.
Call (877) 280-4833 today to speak with a mortgage professional who specializes in Non-QM loans and understands the Lubbock market. Let’s find the right financing solution to help you achieve your homeownership goals.
