--- title: The Basics of Non-QM Lending and its Role in the Mortgage Industry description: Non-QM loans are designed for borrowers who don't meet the strict income and credit requirements of a traditional mortgage but should still be able to repay the loan. image: https://blog.fundloans.com/hubfs/iStock-852479018.jpg --- [![FundLoans](https://blog.fundloans.com/hs-fs/hubfs/raw_assets/public/FundLoans_September2021/images/main_logo.png?width=678&height=406&name=main_logo.png "FundLoans")](https://www.fundloans.com) - [Quick Pricer](https://quickpricer.fundloans.com/) - [Guidelines + Matrices](http://www.fundloans.com/guidelines) - [Loan Products](http://www.fundloans.com/loan-products) - [Overview](http://www.fundloans.com/loan-products) - [Standalone 2nd](http://www.fundloans.com/standalone-2nd) - [Bank Statement Program](http://www.fundloans.com/bank-statement-program) - [DSCR and No Ratio](http://www.fundloans.com/dscr-and-no-ratio) - [Non-QM Full Doc](http://www.fundloans.com/non-qm-full-doc) - Client Tools - [Rates](http://www.fundloans.com/daily-rate-sheets) - [Client Portal](https://www.fundloans.com/en-us/broker-logins-temp) - [Client Administration](http://www.fundloans.com/broker-approval) - [Webinars](http://www.fundloans.com/webinars) - [DSCR Calculator](http://www.fundloans.com/dscr-calculator) - [Blended Rate Calculator (2nd Liens)](http://www.fundloans.com/blended-rate-calculator) - [Forms and Checklists](http://www.fundloans.com/forms) - [Turn Times](http://www.fundloans.com/turntimes) - [Appraisals](http://www.fundloans.com/appraisal) - [Flyers](http://www.fundloans.com/white-label-flyers) - [Blog](https://blog.fundloans.com/blog) - [Private Money Loans](https://www.fidelispf.com/) - [Company](http://www.fundloans.com/our-team) - [Our Story](http://www.fundloans.com/ourstory) - [Our Team](http://www.fundloans.com/our-team) - [Careers](http://www.fundloans.com/careers) - [State Licensing](http://www.fundloans.com/state-licensing) - [Podcast](http://www.fundloans.com/podcast) - [Contact Us](http://www.fundloans.com/contact-us) January 17, 2023 ## The Basics of Non-QM Lending and its Role in the Mortgage Industry ### Written by [Jon Maddux](https://blog.fundloans.com/blog/author/jon-maddux) - - - - [Blog](https://blog.fundloans.com/blog) - / - The Basics of Non-QM Lending and its Role in the Mortgage Industry ![The Basics of Non-QM Lending and its Role in the Mortgage Industry](https://blog.fundloans.com/hubfs/iStock-852479018.jpg) # The Basics of Non-QM Lending and its Role in the Mortgage Industry Non-QM lending, or non-qualified mortgage lending, refers to a type of mortgage lending that falls outside of traditional, government-backed conforming loans. These types of loans are designed for borrowers who may not meet the strict income and credit requirements of a traditional mortgage but should still be able to repay the loan. These types of loans often work well for self-employed borrowers. Traditional Lending vs. Non-QM Lending  The mortgage industry has traditionally relied on conforming loans, which are backed by government agencies like Fannie Mae and Freddie Mac. These loans have strict guidelines for income, credit score, and debt-to-income ratio, which can make it difficult for some individuals to qualify. Non-QM loans, on the other hand, offer more flexibility in these areas and can help borrowers who may not qualify for a conventional loan. The Benefits of Non-QM Lending  One of the main benefits of non-QM lending is that it allows for more borrowers to enter the housing market. This can help to increase homeownership rates and provide a boost to the economy by increasing demand for housing. Additionally, non-QM loans can also help those who had a financial hardship in the past, such as a job loss, medical emergency, or bankruptcy to get back on their feet. Another benefit of non-QM lending is that it can provide more options for self-employed borrowers and real estate investors. For example, [a bank statement loan](https://www.fundloans.com/bank-statement-program), which is a type of non-QM mortgage, can help self-employed borrowers who can't prove their income with traditional pay stubs and W-2 forms. Instead, they can qualify with bank statements or profit and loss statements. Non-QM lenders also offer [DSCR loans](https://www.fundloans.com/dscr-and-no-ratio) that can make it easier for real estate investors to qualify for a non-owner-occupied loan. The Risks of Non-QM Loans  It's important to note that non-QM lending is not for everyone. The lack of government backing means that these types of mortgages carry a higher level of risk for lenders, and as a result, they may have higher interest rates and stricter underwriting guidelines. It’s important for borrowers to be aware of loan terms and conditions to have a clear understanding of the risks and benefits before proceeding. FundLoans was founded as an exception-based lender whose in-house underwriters consider each borrower’s situation to see what could work to get them a loan. In Conclusion  Non-QM lending offers an important alternative to traditional mortgage lending that can help more borrowers become homeowners and provides more options for real estate investors and self-employed professionals. Non-QM loans can be a valuable tool for borrowers who may not qualify for a conventional loan. - - - ### About the author ### Jon Maddux [More articles form this author](https://blog.fundloans.com/blog/author/jon-maddux) [Previous Post](https://blog.fundloans.com/blog/have-you-checked-fundloans-quick-pricer) [Next Post](https://blog.fundloans.com/blog/why-mortgage-brokers-should-consider-non-qm-loans-for-self-employed-borrowers) - Broker Tools - [Broker Portal](https://www.fundloans.com/en-us/broker-logins-temp) - [Broker Approval](http://www.fundloans.com/broker-approval) - [Daily Rate Sheets](http://www.fundloans.com/daily-rate-sheets) - [White Label Flyers](http://www.fundloans.com/white-label-flyers) - [Quick Pricer](http://www.fundloans.com/quick-pricer2) - [Submit Scenario](http://www.fundloans.com/scenario) - [Turn Times](http://www.fundloans.com/turntimes) - [Webinar Calendar](http://www.fundloans.com/webinars) - Company - [Podcast](http://www.fundloans.com/podcast) - [Our Story](http://www.fundloans.com/ourstory) - [Blog](https://blog.fundloans.com/blog) - [Our Team](http://www.fundloans.com/our-team) - [Careers](http://www.fundloans.com/careers) - [State Licensing](http://www.fundloans.com/state-licensing) - [Contact Us](http://www.fundloans.com/contact-us) FundLoans Capital NMLS ID: [1202262](https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/1202262) 12481 High Bluff Dr., Ste. 150 San Diego, CA 92130 [info@fundloans.com](mailto:info@fundloans.com) Main Line: [(877) 671-9842](tel:8776719842) Sales: [(760) 388-5888](tel:7603885888) Loss Payee Information FundLoans Capital ISAOA/ATIMA 12481 High Bluff Drive Suite #150 San Diego, CA 92130 ![Picture of Equal Housing Lender](https://blog.fundloans.com/hs-fs/hubfs/raw_assets/public/FundLoans_September2021/images/footer_logo.png?width=91&name=footer_logo.png "Picture of Equal Housing Lender") For industry professionals only.  This communication is not intended to be distributed to consumers or to the general public and is not an advertisement extended to the consumer as defined by Section 1026.2 of Regulation Z.  All rates, terms, and programs are subject to change without notice.  Other restrictions apply. This is not a commitment to lend. **Texas mortgage company notice:**  Consumers wishing to file a complaint against a mortgage company or a licensed residential mortgage loan originator should complete and send a complaint form to the Texas department of savings and mortgage lending, 2601 North Lamar, Suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the department’s website at [**www.sml.texas.gov**](http://www.sml.texas.gov/). A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out-of-pocket damages sustained by borrowers caused by acts of licensed mortgage company residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at [**www.sml.texas.gov**](http://www.sml.texas.gov/). Residential Wholesale Lender for Mortgage Brokers licensed in the following States: Arizona · California · Colorado · Connecticut · Florida · Georgia · Idaho · Illinois · Maryland · Montana · Nevada · New Jersey · New Mexico · North Carolina · Oregon · South Carolina · Tennessee · Texas · Utah · Washington ​· Wyoming - [Privacy Policy](http://www.fundloans.com/policy) - [Licensing and Disclosures](http://www.fundloans.com/state-licensing) - [Cookie Policy](http://www.fundloans.com/cookies) © Copyright 2026 FundLoans Capital ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Jon Maddux", "url" : "https://blog.fundloans.com/blog/author/jon-maddux" }, "dateModified" : "2023-02-03T23:03:43.725Z", "datePublished" : "2023-01-18T00:48:42.000Z", "headline" : "The Basics of Non-QM Lending and its Role in the Mortgage Industry", "image" : [ "https://blog.fundloans.com/hubfs/iStock-852479018.jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.fundloans.com/blog/the-basics-of-non-qm-lending", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.fundloans.com/hubfs/fundloans%20hubspot.png" }, "name" : "FundLoans" } } ```