Why non-QM borrowers aren’t going away anytime soon

DDA Mortgage • November 16, 2022


While originations are down due to a volatile mortgage market, the population of underserved borrowers who require non-QM products is on the rise.


There will always be a population of borrowers who cannot qualify for a home loan under traditional guidelines. This significant pool of clients includes self-employed, real estate investors and those with credit events.


Prospecting for these borrower types can help protect your business during market shifts. Originators who actively work within the non-QM space are closing additional loans every month.


A look at non-QM borrower profiles


Self-Employed: According to Upwork, there is an estimated 59 million self-employed workers in the U.S. and growing.


This includes 1099 and gig economy workers. That is a lot of potential borrowers. The challenge these borrowers face is typically not being able to use their tax returns due to large tax write-offs. They can afford the home and often have good to excellent credit. But their tax returns are not reflective of their true financial situation. They need an alternative solution to verify their accurate income and ultimately their ability-to-repay. The solution: Bank Statement loans. 


Angel Oak’s Bank Statement loan is ideal for the self-employed.

  • Loans up to $3 million
  • 12 or 24 months personal or business bank statements allowed
  • 1099 earning statements accepted
  • Two years seasoning required for bankruptcy, foreclosure, short sale or deed-in-lieu

Real Estate Investors:  The volume of investment properties has outpaced the purchase of primary homes throughout 2022.


Any originator who has offered a DSCR Investor Cash Flow loan to their investor clients is very happy they did! We have closed multiple deals at one time for the same real estate investor. Many originators have called us to close a cash-out refinance and a purchase for one borrower. They call us because we allow what Fannie and Freddie do not. We help investors buying their 22nd property and those needing to title in an LLC.


Marketing to real estate investors is lucrative regardless of the market. Seasoned investors will find ways to continue to build their portfolios. They know where to find deals and how to make the market work in their favor. They also know originators to trust to get them to the closing table quickly. 


Angel Oak’s DSCR Investor Cash Flow loan is ideal to close real estate investors.

  • Loans up to $1.5 million
  • No personal income or tax returns required
  • Qualifies on the cash flow of the property
  • No limit on total number of properties
  • Investors can title in an LLC

Credit Challenges: Borrowers who have recovered from a foreclosure or bankruptcy do not have wait seven years to get a mortgage. Successfully close credit-worthy borrowers with one of our non-QM loan products.


Angel Oak’s Full Doc Portfolio Select is ideal to close borrowers with credit issues:

  • Loan amounts up to $2 million
  • One year seasoning for foreclosure, short sale or deed-in-lieu
  • Two years seasoning for bankruptcy
  • Two years seasoning for bankruptcy
  • Owner-occupied, second homes and investment properties





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