If you’re a borrower who doesn’t have a traditional income, unconventional mortgage lenders can be a game-changer. Serving groups like self-employed individuals, retirees, real estate investors, and high-net-worth individuals with limited documented income, these lenders specialize in non-QM (non-qualified mortgage) loans that offer flexibility and customizable solutions.
In fact, non-QM loans now make up approximately 5% of the total mortgage market as of mid-2024, which is a significant jump from under 3% in 2020. With around 16.5 million Americans, or 10.4% of the workforce, categorized as self-employed, the need for unconventional mortgage options continues to grow. While these lenders specialize in serving unique borrowers, many also offer traditional mortgage products, making them a versatile choice for anyone looking for home financing.
In this guide, we’ll highlight the top unconventional mortgage lenders and what sets them apart. Let’s jump into it!
What Is an Unconventional Mortgage?
An unconventional mortgage is any home loan that falls outside the standard guidelines of a traditional or conventional mortgage. Non-QM loans are one type of unconventional mortgage that have been designed to accommodate borrowers with unique financial situations. Since it can be difficult for these borrowers to meet the strict criteria for conventional loans, like traditional income verification or debt-to-income (DTI) ratio requirements, non-QM loans offer much more flexibility in underwriting standards.
For example, instead of requiring W2s or pay stubs, an unconventional mortgage lender might accept bank statements, proof of liquid assets, or even rental income. This flexibility sets unconventional mortgages apart, offering solutions for borrowers whose financial profiles don’t align with the traditional mold. Ultimately, these loans provide opportunities for borrowers who otherwise might not qualify for financing, making them popular among self-employed individuals, retirees, real estate investors, and high-net-worth borrowers.
Types of Unconventional Mortgages
When it comes to unconventional or non-QM loans, there are plenty of options to choose from. Whether you’re a real estate investor, self-employed, or your true income just simply isn’t accurately reflected on your tax returns, there’s a loan out there for you.
Below, we’ve put together a brief rundown of the most popular types of non-QM loans:
- Bank Statement Loans: Bank statement loans allow you to qualify for a mortgage by using deposits from your bank statements to verify income, rather than traditional documents like W2s or tax returns. These loans are ideal for self-employed individuals or small business owners with non-traditional income sources.
- P&L Loans: P&L loans rely on a profit-and-loss statement prepared by a CPA to prove your income and financial stability. They are a great option for business owners who may not have easily documented income.
- DSCR Loans: DSCR loans are designed for real estate investors, using a property’s Debt-Service Coverage Ratio to qualify instead of personal income. Lenders focus on whether the rental income from the property can cover the mortgage payments.
- Asset Depletion Loans: Asset depletion loans use your liquid assets, like savings, investments, or retirement funds, to calculate a qualifying “income.” These loans are perfect for high-net-worth individuals or retirees with significant assets but little documented income.
- Fix-and-Flip Loans: Fix-and-flip loans are short-term loans designed for investors purchasing and renovating properties to sell quickly at a profit. They typically offer fast approval and funding, making them a great option for property flippers.
- Construction Loans: Construction loans provide financing to build or significantly renovate a property, covering costs like labor, materials, and permits. These loans usually release funds in stages and often require a solid construction plan and detailed budget.
- Interest-Only Mortgages: Interest-only mortgages allow you to pay only the interest portion of your loan for a set period, typically 5-10 years, lowering initial payments. They’re ideal for borrowers wanting lower payments upfront or anticipating higher income or property appreciation in the future.
Top 10 Unconventional Mortgage Lenders
This list was formed by considering several factors to help determine who the best unconventional mortgage lenders are in the industry, including the experience of employees, good reviews, rate transparency, awards, overall brand message, and more. Please note that this list is in no particular order.
1. Rocket Mortgage
Rocket Mortgage is one of the largest mortgage lenders in the U.S., offering innovative solutions for a wide range of borrowers, including unconventional loans. Their streamlined digital platform simplifies the application process, making it easy for self-employed individuals, investors, and other unique borrowers to qualify. While known for conventional mortgages, Rocket also provides options like bank statement loans and jumbo loans to accommodate non-traditional incomes. Their fast approval process and top-notch customer service make them a go-to unconventional mortgage lender for many.
2. Guaranteed Rate
Guaranteed Rate stands out for its flexible loan options and personalized approach to unconventional borrowers. They offer a variety of non-QM loans, such as DSCR loans for investors and bank statement loans for self-employed individuals. With a solid online platform and competitive rates, Guaranteed Rate provides a balance of convenience and flexibility for anyone looking for a mortgage. Their expertise in tailoring solutions to unique financial situations has made them a trusted choice among non-traditional borrowers.
3. New American Funding
New American Funding specializes in catering to underserved and unconventional borrowers, offering non-QM loans tailored to self-employed individuals, retirees, and investors. They provide many options like bank statement and asset depletion loans for those with unique income streams. New American Funding also emphasizes diversity and inclusion, striving to make homeownership accessible to all. Their personalized customer service and ability to handle complex loan scenarios make them a solid choice for borrowers with non-traditional needs.
4. Defy Mortgage
Defy Mortgage is redefining the mortgage experience for unconventional borrowers with bold, innovative solutions. Their experienced team specializes in non-QM loans, catering to self-employed individuals, retirees, real estate investors, and anyone with unique financial situations. Whether you’re buying or refinancing, Defy simplifies the process with fast closings and personalized options that break down traditional lending barriers. They reject the cookie-cutter, one-size-fits-all approach, instead focusing on empowering borrowers through flexibility and customization. Led by CEO Todd Orlando, Defy is dedicated to challenging the status quo and creating a new era of lending that puts borrowers in control.
5. Pennymac
Pennymac is a well-established lender that offers both conventional and unconventional loan options. They cater to borrowers with non-traditional income sources, offering products like bank statement loans and jumbo loans. With a strong focus on customer service and technology, Pennymac simplifies the application process for unique borrowers. Their competitive rates and variety of loan programs make them a reliable choice for those seeking flexible solutions outside of standard mortgage lending.
6. Better
Better is a tech-driven mortgage lender that offers a range of options for unconventional borrowers. Known for its fully online platform, Better provides Non-QM loans, including bank statement loans and interest-only mortgages, making them ideal for self-employed individuals or high-net-worth borrowers. Their no-commission model ensures competitive rates, and their streamlined process reduces the stress of securing a loan. Better’s commitment to transparency and efficiency has made it a standout unconventional mortgage lender for modern, unique borrowers.
7. New Silver Lending
New Silver Lending specializes in loans for real estate investors, focusing on fix-and-flip financing, DSCR loans, and bridge loans. Their fast approval process and investor-friendly terms make them a top choice for those in the property investment space. New Silver’s flexibility allows borrowers to leverage opportunities quickly, making them ideal for unconventional borrowers with short-term or unique needs. Their expertise in supporting real estate entrepreneurs sets them apart among other unconventional mortgage lenders.
8. Griffin Funding
Griffin Funding is a leader in non-QM lending, offering tailored solutions for self-employed individuals, retirees, and investors. They specialize in bank statement loans, DSCR loans, and asset depletion mortgages, providing flexibility for borrowers with non-traditional income sources. Known for their personalized service, Griffin Funding works closely with clients to find the best-fit mortgage product. Their focus on creative solutions and quick approvals makes them a top unconventional mortgage lender for unique borrowers looking for the perfect balance of flexibility and efficiency.
9. North American Savings Bank
North American Savings Bank (NASB) combines traditional and unconventional lending expertise to serve borrowers with diverse financial needs. They offer non-QM options such as bank statement loans, asset depletion mortgages, and construction loans, catering to self-employed individuals, investors, and retirees. NASB is known for its competitive rates and personalized service, helping borrowers navigate complex financial scenarios. Their strong track record and flexibility make them a reliable unconventional mortgage lender for those looking for customized mortgage solutions.
10. Quontic
Quontic is an innovative lender that focuses on providing mortgages to underserved and unconventional borrowers. Their unique product offerings include bank statement loans, DSCR loans, and interest-only mortgages, tailored to self-employed individuals, real estate investors, and high-net-worth clients. Quontic is also recognized as a Community Development Financial Institution (CDFI), which shows their commitment to making homeownership accessible to a wider audience. Their flexible loan options and customer-focused approach make them a standout choice for non-traditional borrowers.
