Non-QM home equity for self-employed borrowers and investors

How it works

Like any home equity product, the lender looks at your home's value, what you owe and your credit. The difference is how income is verified. These programs may be available through some wholesale lenders, subject to guidelines. Instead of tax returns, a non-QM lender may use:

• Personal or business bank statements, averaged over a set period
• A profit and loss statement prepared or reviewed by a tax professional
• Rental income on investment properties, similar to a DSCR loan
• Assets, in some asset-based programs

Product types

• Non-QM HELOC: A second-lien line of credit using alternative documentation.
• Non-QM home equity loan: A lump-sum second mortgage.
• Non-QM cash-out refinance: A new first mortgage with cash back, such as a bank statement or DSCR cash-out loan.

Who it fits

• Business owners whose write-offs lower their taxable income
• Freelancers and independent contractors
• Real estate investors pulling equity from rentals
• Homeowners with recent changes in income type

Pros and cons

Pros: Alternative income documentation options; can be used for a home equity loan, HELOC or cash-out refinance; available for primary and investment properties.

Cons: Pricing and terms can differ from traditional equity products, so compare both if you could qualify either way; equity and reserve rules can be stricter; some programs carry prepayment terms; guidelines vary widely.

Documents you may need

ID, bank statements or P&L, proof of self-employment, your current mortgage statement, homeowners insurance and leases for rental properties. Requirements vary by lender.

Remember that equity products are secured by your home. Borrow only what you can comfortably repay.

How Turn Times helps

Turn Times is a licensed mortgage broker, not a lender. Instead of offering one company's products, we compare non-QM home equity options from wholesale lenders and walk you through the differences in plain language. Here's how it usually goes:

1. Tell us your goal. A short conversation about the property, your timeline and what matters most to you.
2. We search pricing across wholesale lenders. We look at which wholesale lenders' guidelines may fit your situation, and a licensed loan officer compares their pricing and terms.
3. You choose. We lay out the trade-offs so you can pick the option that works for you.
4. We manage the loan to closing. Appraisal, title, conditions and updates along the way.

Every loan is subject to the lender's underwriting, and approval isn't guaranteed. We arrange loans for properties in California and Colorado.

Frequently asked questions