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Non-QM loans in Arizona, sorted by the documents you have
A non-QM loan is a mortgage made outside the federal Qualified Mortgage definition and outside Fannie Mae, Freddie Mac, FHA and VA programs. That lets the lender qualify you with other records, such as bank statements, 1099s, a profit and loss statement, account balances or a rental property's rent. Start with the documents you already have and the right program usually narrows fast. Programs vary by lender, and Dan will confirm the current terms for your file.
What is a non-QM loan?
It is a home loan made outside the Qualified Mortgage rules. The Consumer Financial Protection Bureau describes a Qualified Mortgage as a loan with less risky features and protections, and it lists features a Qualified Mortgage cannot have, such as interest-only periods and negative amortization (CFPB, "What is a Qualified Mortgage?", last reviewed January 2, 2025, read November 5, 2026).
Lenders use the non-QM label for the loans they make outside that definition and outside the agency programs. Each lender then writes its own documentation rules, which is why a bank statement file or a rental-income file can work there when it would not fit a conventional loan.
Non-QM does not mean no rules. For a home you will live in, the federal ability-to-repay rule still requires the creditor to make a "reasonable and good faith determination" that you can repay (12 CFR 1026.43(c)(1), read November 5, 2026). The same rule lists "financial institution records" among the third-party records a creditor may use to verify income, in paragraph (c)(4)(iv). That is the legal footing for bank statement programs.
Which non-QM path fits the documents you have?
Match the paper you can produce to the program built around it. If more than one row fits, compare both, because the better choice depends on the full cost, the cash needed and the property.
Swipe across the table to see all columns.
| If you have this | Program to look at | What the lender reads | Details |
|---|---|---|---|
| Steady deposits, but tax returns show low income after write-offs | Bank statement loan | Personal or business statements for the lender's review period, with an expense treatment on business accounts | Bank statement loans |
| 1099 forms from clients or a brokerage | 1099 program | The 1099s, with an expense treatment the lender sets | Self-employed options |
| A profit and loss statement for your business | P&L program | The P&L and the preparer's information, often with some bank statements | Self-employed options |
| Large savings or investment balances, little regular income | Asset-based qualifying | Account statements, turned into a monthly figure by the lender's method | Self-employed options |
| A rental property whose rent can carry the payment | DSCR loan | The rent compared with the full housing payment | DSCR loans |
| A property that needs work before it can rent or sell | Fix and flip financing | Purchase price, rehab budget, after-repair value and your exit plan | Fix and flip |
| A condo in a project conventional rules will not accept | Non-warrantable condo financing | The project's HOA documents, budget, insurance and any litigation | Condo financing |
Program by program: who it fits and what it uses
Bank statement loans
Who it fits: Business owners, independent contractors and commission earners whose deposits show steadier income than their tax returns do after legitimate deductions.
What documents it uses: Complete personal or business bank statements for the review period the lender offers, commonly 12 or 24 months; varies by lender. Business accounts get an expense treatment, either the lender's own factor or one supported by a P&L or a tax preparer's letter; varies by lender. Transfers, loan proceeds, refunds and other deposits that are not income come out first.
Read the bank statement loan guide or estimate your income from deposits.
1099 income programs
Who it fits: Independent contractors, real estate agents and others paid on 1099 forms who would rather not qualify on tax-return net income.
What documents it uses: The 1099 forms for the period the lender requires, plus year-to-date support such as recent statements. How much of the 1099 total counts after expenses varies by lender.
See self-employed mortgage options.
Profit and loss statement programs
Who it fits: Owners whose business is easier to see on a current P&L than on last year's tax return, for example after a strong recent stretch.
What documents it uses: A P&L prepared by a tax professional the lender accepts, the preparer's information, and often a short run of bank statements to support it. Who may prepare the P&L and what support is needed vary by lender.
See self-employed mortgage options.
Asset-based qualifying
Who it fits: Retirees, owners between businesses and households with large savings or investment balances but little regular income.
What documents it uses: Recent statements for checking, savings, brokerage or retirement accounts. Which balances count, how much of a retirement account is eligible and how the total becomes a monthly figure all vary by lender.
See self-employed mortgage options.
DSCR loans for rental property
Who it fits: Investors buying or refinancing a rental, including buyers who want title in an eligible LLC. It is not for a home you will live in.
What documents it uses: A lease or the appraiser's market-rent estimate, the full housing payment (principal and interest, taxes, insurance and any HOA dues), entity documents and asset statements. Personal income is usually not the focus; varies by lender. Credit to buy or improve a rental you will not occupy is deemed business-purpose credit under the official interpretation of Regulation Z, comment 3(a)-4 (CFPB eRegulations, read November 5, 2026), so the lender's own underwriting rules drive the file.
Read the DSCR loan guide or run the DSCR calculator.
Fix and flip financing
Who it fits: Investors buying a property to renovate and then sell or refinance.
What documents it uses: The purchase contract, the rehab budget and scope of work, the after-repair value, your track record and proof of funds for closing and the work. Requirements vary by lender.
Non-warrantable condo financing
Who it fits: Buyers of a condo in a project that does not pass conventional project review, whether the reason is litigation, commercial space, investor concentration or another project issue.
What documents it uses: The HOA questionnaire, budget, master insurance and any litigation records, plus your own income documents for whichever path above fits you. Which project issues a lender will accept varies by lender.
Read the condo financing guide.
Is a non-QM loan right for me?
It is worth a look after the agency route has been checked. If your tax returns, W-2s or pay stubs support the loan through a conventional, FHA or VA program, that route usually comes first because its rules are published and standardized. Non-QM earns its place when real income or property cash flow does not show up in the documents agency programs require.
Dan runs both comparisons before you choose. Compare the total cost, the cash needed at closing, any prepayment terms and how long you expect to keep the loan, not only whether you qualify.
Do non-QM loans cost more than conventional loans?
Usually, yes. Lenders price for the different documentation and risk, so a non-QM loan often costs more than a comparable agency loan for the same borrower. How much more varies by lender and by file. Ask for a Loan Estimate on each option and compare them line by line; the CFPB's Loan Estimate explainer shows where to look, and so does how to read a rate quote.
Can a non-QM loan be used for a second home or investment property?
Often, yes, depending on the program. DSCR and fix and flip financing are built for investment property. Bank statement, 1099, P&L and asset-based programs may cover a primary home, a second home or an investment property, and which uses are allowed varies by lender. Tell Dan the planned use at the start, because occupancy changes the program list.
What Arizona rules affect a non-QM rental file?
City short-term rental rules come first. Scottsdale requires a city license for rentals of less than 30 days and a state transaction privilege tax license for each rental property (City of Scottsdale, Information for Owners and Operators, last updated July 31, 2026, read November 5, 2026). Phoenix requires every short-term rental to obtain a permit from its Planning and Development Department (City of Phoenix Short-Term Rental Registry, read November 5, 2026).
HOA documents can be stricter than city rules, so read them before you count on short-term income. For the payment side, the Maricopa County Treasurer publishes tax information for any county parcel (Find My Property and Tax Information, read November 5, 2026).
What should I gather before a non-QM review?
- Recent statements for every account you might use, with every page included.
- Whichever income record fits your path: bank statements, 1099s or a current P&L.
- Business license or formation documents and a short description of the business.
- A written note on any large or unusual deposit, with the invoice or record behind it.
- For a rental: the lease, rent ledger, HOA and insurance details and any entity documents.
- The purchase contract, or the current mortgage statement for a refinance.
Run the numbers before you call
Bank statement income estimator
Turn 12 or 24 months of deposits into an estimated monthly income figure.
Estimate bank statement incomeSecond opinion
Turned down on a self-employed or investor file? Send Dan the reason you were given.
Get a second opinionFrequently asked questions
Is non-QM the same as subprime?
No. Non-QM describes how a loan is documented and structured relative to the Qualified Mortgage rule, not the borrower's credit. A borrower with strong credit can still need a non-QM path because of how the income is documented. Credit requirements vary by lender.
Do non-QM loans require tax returns?
Not always. Bank statement, 1099, P&L, asset-based and DSCR programs are built to qualify without a full tax-return income analysis. A lender may still ask for business records or other documents to verify the file, and what it asks for varies by lender.
Can I refinance out of a non-QM loan later?
Possibly. If your documented income later supports a conventional, FHA or VA loan, a refinance can move the loan into an agency program. Check for a prepayment penalty first; whether one applies and how it works varies by lender and program.
How does Dan find non-QM programs?
Dan is a mortgage loan originator with Barrett Financial Group, a mortgage broker, and he compares non-QM programs from the wholesale lenders available to him. Which lenders and programs fit depends on your documents, the property and how you will use it.
This page explains how non-QM programs generally work. It is not a commitment to lend or a statement of any lender's current terms. Programs vary by lender, and Dan will confirm the current terms for your scenario.
Tell Dan how you earn your income
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