In the United States, home mortgage loans generally fall into two main categories: QM (Qualified Mortgage) and Non-QM (Non-Qualified Mortgage).

QM (Qualified Mortgage)

A QM mortgage is a traditional home loan that is underwritten using standard income documentation such as W-2s, pay stubs, tax returns, and other conventional financial records.

These loans typically follow the guidelines established by government-backed agencies or conform to the requirements of Fannie Mae and Freddie Mac. As a result, QM loans are the most common mortgage products available in the market.

Most QM programs require a minimum down payment of 3%, depending on the loan program and borrower qualifications.

Non-QM (Non-Qualified Mortgage)

A Non-QM mortgage is designed for borrowers who may not meet traditional QM lending guidelines. These programs offer more flexible underwriting standards and alternative methods of income verification.  Most Non-QM programs require a minimum down payment of 10%, although requirements may vary by lender and loan program.  Because qualification guidelines are more flexible, Non-QM loans can be an excellent solution for:

• Self-employed borrowers
• 1099 independent contractors and freelancers
• Real estate investors
• Business owners with complex income structures
• Borrowers who recently started a business
• Individuals with non-traditional income sources

Non-QM programs can be used for:

• Home Purchases
• Mortgage Refinances
• Home Equity Financing

✅ QM Mortgage

• • • Ideal for W-2 employees and borrowers with traditional income documentation
    • Lower interest rates in most cases
    • Minimum down payment as low as 3%
    • Standard underwriting guidelines

✅ Non-QM Mortgage

• • • Ideal for self-employed borrowers, freelancers, investors, and borrowers with unique financial situations
    • Flexible qualification requirements
    • Alternative income documentation accepted
    • Typically requires at least 10% down payment

Which Program Is Right for You?

The best mortgage program depends on your income structure, credit profile, assets, down payment, and financial goals.

💡 QM loans generally offer lower interest rates, while Non-QM loans provide greater flexibility for borrowers who may not qualify under traditional lending guidelines.