A Non-QM (Non-Qualified Mortgage) loan is a loan that doesn't meet the standard requirements of agency guidelines (like Fannie Mae or FHA). They’re designed for borrowers who may not qualify for traditional financing but can demonstrate ability to repay in other ways.

Self-employed borrowers Real estate investors, Foreign nationals, High net worth individuals but low income on paper

A DSCR loan is for real estate investors and is underwritten primarily using the income from the investment property—not personal income.

DSCR = Gross Monthly Rent ÷ PITIA (Principal, Interest, Taxes, Insurance, and HOA if applicable). Example: $2,000 rent ÷ $1,600 PITIA = 1.25 DSCR

Usually 1.00 (property breaks even), though some outlets go down to 0.75 with adjusted pricing .

No. DSCR loans do not require personal income documentation.

Yes, some outlets accept it, often with documentation like Airbnb reports or bank deposits. Policies vary.

Primarily self-employed borrowers who write off expenses on tax returns and need alternative income documentation.

Lenders average 12 or 24 months of business or personal bank statements. Deposits are analyzed to determine income.

Yes, many lenders require a CPA or tax preparer with a PTIN (Paid Preparer Tax Identification Number) to provide a letter confirming the borrower’s self-employed status and, in some cases, the business expense ratio.

Lenders typically apply a standard expense factor (e.g., 50% or 20%) to the borrower’s income, but this can vary. Some lenders may accept a more precise business expense ratio if provided by a CPA or tax preparer.

Lenders typically accept either business or personal bank statements to document income, depending on the structure of the borrower’s self-employment.

A P&L loan is a type of Non-QM mortgage designed for self-employed borrowers whose income is calculated using a Profit & Loss (P&L) statement instead of traditional tax returns. This approach allows borrowers to qualify based on actual business performance rather than taxable income, which may be reduced due to write-offs. The P&L must cover either: The most recent 12 months, or the most recent 24 months, and must extend through the most recent full month.

Yes. Most lenders require 2–3 months of recent business bank statements to validate the income shown on the P&L and confirm consistent cash flow.

The P&L can be prepared by a CPA or a tax preparer with a valid PTIN (Paid Preparer Tax Identification Number).