What are the Best Non-QM Products for Real Estate Investors? 

First Heritage Mortgage | October 16, 2025

Investing in real estate can be very lucrative when done correctly. Properties not only offer passive income but also tend to appreciate over time. In fact, real estate values have historically increased at a rate faster than inflation, making it a powerful wealth-building tool. 

Real estate investors can sometimes face unique challenges when it comes to financing their next project. That’s where Non-Qualified mortgage (Non-QM) loans come in. These flexible products are designed for investors, self-employed borrowers, and anyone whose financial picture doesn’t fit the conventional mold. 

In this blog, we’ll break down what non-QM loans are, how products like DSCR and Bank Statement Loans work, and how they can help you scale your investment property strategy.

What Is a Non-QM Loan? 

A Non-Qualified Mortgage, or Non-QM loan, is a type of financing that doesn’t follow the strict income and documentation rules of traditional mortgages. Instead of focusing on W-2s or tax returns, Non-QM loans consider alternative factors like cash flow, assets, and bank deposits. 

Key benefits of Non-QM loans include: 

  • Flexible income verification 
  • Underwriting based on property performance and borrower assets 
  • Options tailored to real estate investors, business owners, and self-employed borrowers 

Non-QM loans are especially attractive to real estate investors because they provide access to financing even when traditional requirements are difficult to meet. Beyond DSCR and Bank Statement Loans, investors may also explore interest-only mortgages or foreign national loans, which offer unique paths to property ownership and portfolio growth. 

What Type of Real Estate Investor Should Use a Non-QM Loan? 

Non-QM products are built for real estate investors whose financial situations might not meet the strict rules of conventional loans.  

They’re especially valuable for: 

  • Self-employed investors and business owners who don’t have consistent W-2 income but earn steady income from their business or rental properties. 
  • Investors growing a portfolio who want to buy more properties without being limited by conventional loan rules.  
  • Cash flow-focused investors who want to qualify based on rental income and property performance instead of tax returns or W-2 forms. 
  • Buyers of unique properties that might not meet standard loan guidelines but still have strong income potential. 

Non-QM loans are especially beneficial for real estate investors who have nontraditional income, want to scale their portfolios quickly, rely on property cash flow to qualify, or are looking to finance unique properties that fall outside conventional loan guidelines. 

What Is a DSCR Loan and Why Do Investors Use Them? 

A DSCR Loan, short for Debt Service Coverage Ratio Loan, measures whether a property’s rental income can cover its loan payments. Lenders calculate a property’s DSCR ratio by dividing the property’s net operating income by the total mortgage payment, including principal, interest, taxes, and insurance. 

For example, a property that generates $3,000 in monthly rent with $2,000 in monthly payments has a DSCR of 1.5. This means the property’s cash flow comfortably covers the loan obligations. Lenders typically look for a ratio above 1, but requirements can vary. 

Real estate investors use DSCR loans because the property qualifies on its own merit, rather than relying on W-2 income or personal tax returns. This makes DSCR loans a powerful tool for building and scaling an investment property portfolio. 

Bank Statement Loans for Real Estate Investors 

A Bank Statement Loan allows borrowers to qualify using 12 to 24 months of bank deposits instead of tax returns. For self-employed real estate investors and small business owners, this method shows true cash flow more clearly than traditional income documents. 

Compared to conventional loans, bank statement programs have more flexibility and fewer roadblocks. For investors whose income changes month to month, this loan aligns better with how they really get paid. 

How to Qualify for an ITIN Loan 

An ITIN loan is a financing option for someone with an Individual Taxpayer Identification Number (ITIN), but who doesn’t necessarily have a Social Security number. The borrower must show steady income, use valid identification, and often put down a higher down payment.  

ITIN loans make it possible for non-U.S. citizens to invest in real estate in the U.S. when other loan options are limited, helping more investors take advantage of the opportunities the U.S. housing market has to offer. 

To qualify for an ITIN loan, borrowers typically need to: 

  • Provide proof of reliable income  
  • Show valid government-issued identification and your ITIN number 
  • Make a down payment  
  • Meet credit and documentation requirements  

By combining this product with other Non-QM options, investors can expand their opportunities and build long-term wealth in a strong housing market. 

How to Choose the Right Non-QM Product 

Choosing between a DSCR Loan, Bank Statement Loan, or other Non-QM option depends on your investment strategy: 

  • DSCR Loan: Best for rental property buyers who want financing based on property cash flow. 
  • Bank Statement Loan: Suited for self-employed investors who prefer a qualification based on deposits rather than tax returns. 
  • ITIN Loan: Lets non-US citizen investors purchase investment properties with an Individual Taxpayer Identification Number (ITIN).  
  • Other Non-QM products: Interest-only loans or foreign national loans may be right for unique investment strategies. 

Partnering with an experienced lender like First Heritage Mortgage helps ensure you select the right Non-QM product for your goals and long-term growth. 

FAQs About Non-QM Loans  

What is a Non-QM loan? 
A Non-Qualified Mortgage uses alternative documentation like bank statements or rental income instead of W-2s and tax returns. 

Who are Non-QM loans for? 
They’re popular with real estate investors, self-employed borrowers, and those with complex income. 

What is a DSCR loan? 
A DSCR loan qualifies based on rental income covering the mortgage payment, not personal income. 

How do bank statement loans work? 
They use 12–24 months of bank deposits to verify income, making them ideal for self-employed investors. 

What do you need to qualify for an ITIN loan? 
Applicants must possess a valid ITIN issued by the IRS, proof of employment or income, creditworthiness, and money for the down payment. 

Are Non-QM loans safe? 
Yes. They’re fully underwritten, just with more flexible requirements than traditional mortgages. 

Can they help grow my portfolio? 
Yes. Products like DSCR loans let investors finance more properties without strict income rules. 

Non-QM loans open the door to financing that a conventional loan can’t always provide. Whether you’re scaling your real estate investment portfolio with a DSCR Loan, leveraging deposits through a Bank Statement Loan, or exploring other Non-QM options, the right strategy can help you reach your goals faster. 

Ready to explore Non-QM financing? Contact a First Heritage Mortgage loan officer to learn which option fits your investment strategy best. 

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The included content is intended for informational purposes only and should not be relied upon as professional advice. Additional terms and conditions apply. Not all applicants will qualify. Consult with a finance professional for tax advice or a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 10/21/2025.
The views and opinions expressed in this blog post are those of the author and do not necessarily reflect the official policy or position of First Heritage Mortgage L.L.C. The content provided is intended for informational purposes only and reflects the personal opinions of the author. It should not be construed as financial, legal, or professional advice.
A lender must make a good-faith effort to determine that you have the ability to repay your mortgage before giving it to you. This is known as the ‘ability-to-repay’ rule. If your loan is a Qualified Mortgage, it means the loan met certain requirements and it’s assumed that the lender followed the ability-to-repay rule.