General

What are “Alternative” or “Non-QM” Mortgages?

Can’t qualify for a traditional mortgage? You have options.

You may have heard different terms for these specialized loan programs: “Bank Statement Loans,” “DSCR,” “Asset Depletion,” “P&L Loans,” or “No Doc” loans. These are all types of mortgages that fall into the Alternative or Non-QM (Non-Qualified Mortgage) category, and they can be game-changers for borrowers who don’t fit the traditional lending box.

Traditional Mortgages: The Standard Path

Traditional mortgage loans—including VA, FHA, USDA, and conventional conforming and jumbo loans—follow strict federal guidelines on income documentation, property types, credit scores, and debt-to-income ratios. When you qualify, government backing or GSE guarantees reduce lender risk, resulting in lower interest rates and down payment requirements as low as 0-3%.

But not everyone fits these guidelines. Self-employed with business deductions? Unique property? Credit issues? Real estate investor with multiple properties? Alternative loans offer the flexibility traditional loans cannot.

Trade-off: Alternative loans typically require larger down payments—10-15% for primary residences, 20-25% for investment properties.

Alternative Loan Types Explained

Bank Statement Loans

Best for self-employed borrowers with strong cash flow but lite tax-reported income. We use your consistent monthly bank deposits over 12-24 months to calculate qualifying income instead of tax returns.

Profit & Loss (P&L) Loans

We can use a Profit and Loss statement prepared by you or your bookkeeper as the income basis. A CPA or tax professional must review and sign off on the P&L.

DSCR Loans (Debt Service Coverage Ratio)

For rental properties only. We don’t evaluate your personal income at all—just whether the property’s rental income exceeds the mortgage payment. If the property supports itself, you qualify. Ideal for investors with complex income situations. Requires 20-25% down payment.

Asset Depletion Loans

No job or traditional income? If you have substantial savings, stocks, bonds, or retirement accounts, we convert those assets into calculated monthly income that qualifies you for a mortgage.

True “No-Doc” Loans

We work with select exempt institutions offering true no-documentation loans for specific situations. These work well for properties with substantial equity where you can articulate a logical repayment strategy.

Other Non-QM Options

Additional programs address credit flexibility, foreign nationals, special property types (unique condos, rural properties, mixed-use), and complex income scenarios.

Finding Your Solution

Every borrower’s situation is unique. Whether you’re a business owner, real estate investor, retiree, or rebuilding after a financial setback, there’s likely a mortgage solution for you.

Ready to explore which alternative loan program fits your needs? Contact me for a free consultation. I’ll analyze your specific situation and find the best option to help you achieve your real estate goals.

Monthly Rate Update – March 2023

Rates have risen slightly since last month and are generally expected to remain around current levels for the next few months.

If you even think you might be interested in a home purchase this Spring, get started now with a pre-approval, so you are ready if anything pops up.

30 Year Fixed Conforming

This Month	Last Month	APR
6.125% + 1.25pts	Was Better	6.25% APR**

30 Year Fixed Veteran Loan

This Month

Last Month

APR

5.625% + 1.40 pts

Was Better

5.77% APR**

5.625% 0 pts

– For Disabled Veterans

Usually the best option-period if you are qualifying a disabled veteran

5.70% APR**

Other options and Jumbo Loans over $1.1 million

We offer a wide rang of specialty products from $100,000 to $3,000,000 that allow for low down payments, flexible guidelines on credit history, flexible ways to calculate income for self employment, etc.

If there are any other rates you would like included next month or have any questions, call us!

**Advertised rates are for for primary residence purchase loans for well qualified borrowers with credit scores over 740, and over 20% down payment. Prospective borrowers must be able to fully document income per agency guidelines, and meet all other agency requirements for conforming loans. This is not an approval or loan commitment. All borrowers must apply for and be approved for these programs. The Veteran loan pricing reflects 10% or more down and incorporates the VA funding fee into the points listed in the quote.

By Robert Musseman
March 8, 2023

Monthly Rate Update – January 2023

Rates have improved a bit since last month and may continue to get better as we get into Spring. This means that house you have been thinking about may be back within your reach by the Spring. So get ready now!

If you even think you might be interested in a home purchase this Spring, get started now with a pre-approval, so you are ready if anything pops up.

30 Year Fixed Conforming

This Month	Last Month	APR
5.625% + 1.5 pts	Was Worse	5.80% APR**

30 Year Fixed Veteran Loan

This Month

Last Month

APR

5.625% + 0.75 pts

Was Worse

5.77% APR**

5.625% – 0.75 pts (credit)

– For Disabled Veterans

Usually the best option-period if you are qualifying a disabled veteran

5.70% APR**

Other options and Jumbo Loans over $1.1 million

We offer a wide rang of specialty products from $100,000 to $3,000,000 that allow for low down payments, flexible guidelines on credit history, flexible ways to calculate income for self employment, etc.

If there are any other rates you would like included next month or have any questions, call us!

New Loan Program Brochure!

All the mortgage lingo and loan options can get overwhelming! We created a loan program brochure just for you, it gives you a brief summary of the requirements and qualifications for each of the programs we offer. If you are looking for a loan that is not listed or have questions about what is shown, feel free to call! We will provide you with the guidance you need.

Download Loan Program Brochure

Having trouble getting a home loan or business Loan? Contact Us.

Don’t give up without reaching out to Oakstreet first. In addition to traditional home loans, we have long term loans for homebuyers and businesses with employment challenges, credit challenges, and special situations. We offer short term bridge loans to allow you to acquire property now, and refinance into a traditional loan once you are ready. Call us today and let’s see if we can help you make it happen.

BIG WEEK IN MARKETS NEXT 10 DAYS

The Fed will be announcing 2 more rate changes this year. The first is November 2nd (this Wednesday) and the final one will be December 14. A 0.75% increase is generally anticipated Wednesday but expect some market volatility whatever they announce. Also, the mid-term elections are being held next Tuesday the 8th, expect more market volatility. Basically– hang on for the next 10 days.

Get Our Monthly Rate update and Newsletter!

This will be a great way to keep abreast of developments in the DMV Mortgage and real estate markets. We email out 1 per month. Just goto our home page and signup.

Show me the money! Today’s cashout refinance loan options

Values have gone up very quickly recently, so it may benefit you to refinance your real estate at very low rates in the 3’s, with very low payments, to payoff debts, invest the proceeds, improve your home, or for other needs.

I hope you will find these notes useful. Of course, please call/email anytime with questions.

CASHOUT LOANS SECURED BY YOUR RESIDENCE:

Mortgage loans secured by your residence offer the most cash relative to your home’s value and the lowest rates. We can finance up to 80% of your home’s value with traditional low rate 30 year fixed rate loans. However, the lowest rates are available for cashout loans of up to 75% of your home’s value.

We also offer options as high as 85% of your home’s value with an FHA loan, and you can even cashout up to 90% of your home’s value with a VA loan if you are a Veteran. (The VA also offers 100% cashout loans but the red tape and restrictions are normally a bit too onerous.). 90% is pretty darn good for cashout.

The VA and FHA options are a bit more costly than traditional but they allow for those higher LTVs which may be worth the extra cost depending on your situation. Let’s face it, all rates are pretty low right now if you have a good use for the funds.

CASHOUT LOANS SECURED BY YOUR RENTAL HOUSES:

You can generally receive up to 75% of the property’s value, and that’s at a low rate fixed for 30 years in the high 3’s for our traditional offerings. We offer slightly higher rates and LTV options for special situations. Not too bad.

SOME FINE PRINT

You must have solid credit/income/employment history etc for the fully documented long term fixed rate loan options backed by the Government. You must qualify and be approved but they are not overly restrictive.
We do have other cashout loan options available if you do not quite “fit the box” of the traditional government guaranteed/insured loans.
For my investor clients: If you have owned the property less than 6 months, we need to discuss some restrictions and some options to resolve.
If you own commercial real estate or buildings/warehouses/offices, we can discuss those as well.

I look forward to your questions and thoughts. Just drop me an email or give me a call anytime.

What are “Alternative” or “Non-QM” Mortgages?

Traditional Mortgages: The Standard Path