Not every borrower fits neatly into a conventional mortgage box. In fact, as homeownership has become more dynamic and diverse, so too have the mortgage options available.

If you’re self-employed, an investor, or someone with complex income streams, there’s good news — you’re no longer out of luck.

There’s been a significant rise in non-QM loans (non-qualified mortgages), which are built specifically for people with outside-the-box financial profiles. These include:

• Debt Service Coverage Ratio (DSCR) loans

• Bank statement loans

• Interest-only or asset-based loans

Each of these loan types offers unique flexibility and opportunity — here’s how they work, who they help, and why they’re rapidly gaining traction in today’s lending environment.

1. DSCR Loans for Real Estate Investors

The Debt Service Coverage Ratio (DSCR) loan is built for real estate investors who want to qualify based on a property’s income rather than their personal income.

Here’s how it works:

• The lender evaluates whether the rental income on the property is enough to cover the mortgage payment.

• As long as the rent covers the monthly debt obligation (typically at a ratio of 1.0x or higher), the loan can be approved.

Why it matters:

Investors with multiple properties, write-offs, or inconsistent W-2 income love DSCR loans because they sidestep traditional income verification requirements.

These loans are ideal for long-term rental properties, especially in markets like Sonoma, Napa, and the East Bay, where rents are strong.

2. Bank Statement Loans for the Self-Employed

Self-employed borrowers often look great on paper — until that paper is a tax return.

Deductions and write-offs can significantly reduce reported income, making it hard to qualify under conventional rules.

Bank statement loans solve this by using 12 to 24 months of business or personal bank statements to calculate average monthly deposits, which are then used to determine qualifying income.

Best for:

• Self-employed entrepreneurs

• Freelancers

• Commission-based earners

• Gig economy professionals

If you’re bringing in strong revenue but writing off expenses aggressively, this loan lets you qualify based on what you’re actually earning — not just what your tax return shows.

3. Asset-Based and Interest-Only Mortgages

For borrowers with substantial assets but low income, asset-based mortgages provide a way to qualify by using liquid savings, investments, and retirement accounts.

Interest-only mortgages allow borrowers to make lower payments in the early years of the loan, freeing up cash flow — which can be particularly useful for investors or buyers with uneven income.

These programs may not be for everyone, but for the right borrower, they’re a game changer.

4. Non-QM Loans: The Bigger Picture

All of the above fall under the non-QM umbrella, meaning they don’t conform to Fannie Mae or Freddie Mac underwriting guidelines.

That said, they are fully documented, regulated loans issued by reputable lenders.

What’s changed is lender innovation — recognizing that the traditional W-2 borrower is no longer the only type of buyer in today’s market.

As a result, the industry is evolving to support a wider spectrum of financially responsible borrowers.

Why Are These Loans Growing in Popularity?

• Rising self-employment across industries

• Real estate investing trends and Airbnb/VRBO growth

• Post-pandemic income disruptions

• Retirement income complexity

• People using equity to invest, consolidate, or launch ventures

With average interest rates sitting in the 6.75% to 8.5% range, more borrowers are getting creative and strategic — especially when traditional financing doesn’t fit.

What You Need to Know Before Applying

• Non-QM loans typically require a larger down payment (usually 20–30%)

• Rates may be slightly higher than conforming loans, but offer greater flexibility

• Credit score requirements range from 620 and up, depending on the program

• Speed: Many non-QM loans can close in 21–30 days if documentation is ready

Bottom Line

If your situation doesn’t fit neatly into a traditional loan program — whether due to self-employment, investment income, or a unique asset profile — non-QM loan programs like DSCR and bank statement loans could be your best option.

These programs offer flexibility, speed, and smart underwriting for borrowers who need real solutions.

If that sounds like you, let’s explore your options and find the program that works for your financial goals.

Get a free rate quote today!