A non-QM loan is a mortgage that does not fit inside the federal Qualified Mortgage rules, usually because of how income is documented rather than whether the borrower can afford the payment. 1st Advantage Mortgage is a licensed mortgage broker and lender in Charlotte, NC. We work with specialist wholesale lenders and compare their program guidelines and pricing for your scenario. If you are self-employed, an investor, or someone whose income is real but does not show up cleanly on a tax return, a non-QM loan is often the way you buy or refinance. As a mortgage lender and broker, we put your file in front of multiple wholesale lenders.
Non-QM loans typically carry a higher rate and a larger down payment than a conventional loan, because the lender is accepting a different kind of documentation. In exchange, they qualify borrowers a bank would decline. We compare the non-QM lenders in our network on every file so you see the program that fits, not the only one a single institution happens to offer.
Bank statement loans
A bank statement loan qualifies you on deposits, not tax returns. The lender reviews 12 or 24 months of business or personal bank statements, calculates a monthly income from the deposits, and uses that number to approve the loan. Self-employed buyers in Charlotte who take legitimate write-offs and cannot qualify on their tax returns are the most common bank statement borrowers.
What to expect: 12 or 24 months of statements, a down payment that typically starts around 10% and is more often 15% to 20%, credit scores that typically start in the 620 to 660 range depending on the program, and reserves after closing. Available for purchase and refinance, primary residence, second home and investment property.
DSCR loans
A DSCR loan, short for debt service coverage ratio, qualifies an investment property on its own rental income rather than the investor’s personal income. The lender compares the property’s monthly rent to its monthly payment (principal, interest, taxes, insurance and any HOA). A ratio of 1.0 means the rent covers the payment; many programs want 1.0 or higher, and some accept lower with compensating factors.
What to expect: no personal income documents or tax returns, a down payment that typically starts at 20% to 25%, the ability to close in an LLC on many programs, and no limit on the number of financed properties with some lenders. Investors buying rentals across the Charlotte metro, from Gastonia to Fort Mill, use DSCR loans to scale without re-qualifying on personal income every time.
Asset depletion loans
An asset depletion loan turns liquid assets into qualifying income. The lender takes eligible assets, such as savings, brokerage accounts and retirement funds, divides them over a set number of months, and treats the result as monthly income. Retirees, recent business sellers and high-net-worth buyers whose wealth is in assets rather than a paycheck use this to qualify without a traditional income.
1099-Only Non-QM Loans
A 1099-only loan qualifies contractors and commissioned earners on one or two years of 1099 forms instead of full tax returns. Income is calculated from the 1099 totals with an expense factor, which often produces a higher qualifying income than the net figure on a tax return.
Who non-QM loans are for
- Self-employed buyers and business owners whose tax returns understate their real income
- Real estate investors buying or refinancing rental property
- Contractors, gig workers and commissioned salespeople paid on 1099
- Retirees and buyers with significant assets and limited paycheck income
- Buyers recently back from a credit event who do not yet fit conventional or FHA timelines
Non-QM versus conventional
Conventional loans have the lowest rates and down payments but the strictest documentation. Non-QM loans accept alternative documentation in exchange for a higher rate and more money down. The right answer depends on your file. On every non-QM inquiry we first check whether a conventional, FHA or VA program works, because it may fit the scenario. If it does not, we show you the non-QM options side by side.
Non-QM lending in Charlotte
Charlotte has one of the fastest-growing populations of self-employed professionals and small-business owners in the Southeast, and the metro’s rental market from Uptown to Fort Mill keeps drawing investors. Both groups are underserved by banks. As a mortgage broker and lender with a wholesale network that includes non-QM specialists, we close these loans regularly across Mecklenburg, Gaston, Union, Cabarrus, Iredell and York counties.
If you are self-employed rather than an investor, the self-employed mortgage guide walks through the same programs from the borrower side.