A Virginia buyer purchasing a $750,000 Short Pump home with 20% down would finance $600,000. At an illustrative 7.75% fixed rate, principal and interest is about $4,298 per month. At 7.25%, it is about $4,093 – a $205 monthly difference and $12,300 over five years before considering the different loan balances. If broker compensation were 1% of the loan amount, that is a disclosed $6,000 fee. The point of a non QM loan review is not to chase a headline rate. It is to determine whether the program, documentation, reserve requirement, and pricing actually fit your financial picture.
Duane Buziak, NMLS #1110647, helps Virginia buyers, homeowners, and investors compare mortgage options across a broad wholesale marketplace. A broker is not confined to one institution’s program menu. That distinction matters most when tax returns do not tell the whole story.
Table of Contents
- What a non-QM loan is
- Who should consider a non-QM mortgage
- Non QM loan review: numbers that matter
- Broker versus a single-shelf institution
- Virginia market considerations
- How soft-pull prequalification works
- FAQ
What a non-QM loan is
Non-QM means non-qualified mortgage. It does not mean no documentation, no underwriting, or no ability-to-repay review. It means the mortgage does not fit the standard Qualified Mortgage framework used for many conventional loans. A non-QM program may evaluate income, assets, cash flow, or property rent using methods that a conventional program does not accept.
That can be useful for a self-employed buyer in Glen Allen who legitimately writes off substantial business expenses, a Richmond buyer with recent commission income, or an investor acquiring a rental in Virginia Beach. Common options include 12- or 24-month bank statement programs, asset-depletion programs, foreign national programs, and debt service coverage ratio, or DSCR, financing for investment property.
The trade-off is straightforward: non-QM pricing can be higher than a conventional option, and reserve requirements can be stricter. A borrower may need six to 12 months of housing payments in verified reserves, depending on the transaction, credit profile, occupancy, and property count. That is why a serious review starts with the complete scenario rather than a single advertised rate.
Who should consider a non-QM mortgage?
A non-QM mortgage may be worth reviewing when a well-qualified borrower cannot document income in the narrow format required by conventional underwriting. It can be especially relevant for business owners, real estate investors, retirees using assets, foreign nationals, and buyers with substantial deposits that need a clear paper trail.
It is not automatically the right solution for every self-employed borrower. A conventional mortgage may still be less expensive when two years of personal and business returns show sufficient qualifying income. FHA financing can also be a better fit for certain owner-occupants, while VA financing deserves close attention for eligible veterans and service members. A broker’s job is to compare those paths, explain the trade-offs, and avoid placing a borrower in a more expensive program simply because it is easier to approve.
Non QM loan review: the numbers that matter
Credit score is only one part of the file. Many non-QM programs begin around a 620 FICO score, while stronger pricing and more flexible loan-to-value options often appear at 680, 700, or 720-plus. A 680 score with 25% down and 12 months of reserves may produce a materially different result than a 620 score with 10% down and limited reserves.
Documentation is equally important. In a bank statement review, underwriters generally analyze deposits over 12 or 24 months, then apply an expense factor for the business when appropriate. A contractor earning $18,000 in average monthly deposits is not automatically qualifying on $18,000 per month. Business expenses, deposit consistency, and large-deposit documentation all affect usable income.
For DSCR financing, the property income matters. If a Chesterfield rental is expected to generate $2,800 monthly rent and its proposed principal, interest, taxes, insurance, and association dues total $2,500, the DSCR is 1.12. Some programs permit ratios below 1.00 with stronger credit, more equity, or additional reserves, but the pricing may change. A broker should show the ratio, not simply say the property qualifies.
Closing costs also need a plain-English review. Non-QM third-party and settlement costs commonly fall around 2% to 5% of the loan amount, depending on points, appraisal complexity, title work, escrows, and investor guidelines. On the $600,000 example, 3% equals $18,000. Ask about our no-out-of-pocket closing options where appropriate, but understand that costs may be covered through pricing, seller concessions, or other transaction terms rather than disappearing.
When comparing written estimates, a preferred title company can save an additional $2,000 on average. That figure should be evaluated alongside the full loan cost, not treated as a substitute for comparing rate, points, and monthly payment.
| Review point | Mortgage broker | Single-shelf institution |
|---|---|---|
| Investor access | Can compare programs and pricing across many wholesale investors. | Offers its own limited program shelf. |
| FICO floors | Can identify investors whose published guidelines fit the scenario. | Uses that institution’s score and loan-to-value standards. |
| Program breadth | Can review conventional, VA, FHA, jumbo, bank statement, DSCR, and non-QM options. | Availability depends on its internal offerings. |
| Pricing flexibility | Can compare combinations of rate, points, credits, and fees across investors. | Pricing is limited to its own rate sheet. |
| Credit approach | May begin with a soft credit pull mortgage prequalification. | May require a hard inquiry before providing detailed terms. |
Virginia market conditions change the strategy
Virginia remains a market of local differences. Virginia REALTORS reported a statewide median sales price of about $420,000 in 2024, while buyers in higher-cost pockets can face much steeper entry points. Redfin reported Henrico County’s median sale price at roughly $390,000 in 2024. Conditions in Midlothian, Fredericksburg, and Charlottesville can shift quickly when inventory is tight, particularly for well-maintained homes priced near local demand levels.
The 2025 baseline conforming loan limit for a one-unit property is $806,500 in most Virginia counties, with higher limits in designated high-cost areas. That matters because a buyer near the limit may have a conventional route, a jumbo route, or a non-QM route depending on income documentation and down payment. Competition can make a fast, accurate prequalification valuable, but speed should not replace a full comparison of terms.
Start with a no-credit-hit conversation
A no hard inquiry mortgage pre approval discussion can begin with a soft pull mortgage broker review, estimated income, assets, and property goals. This mortgage pre approval without hard pull approach is useful for early planning because it helps protect credit while you decide whether to offer on a home, refinance, or add an investment property.
A soft pull does not replace final underwriting. Once you choose a program and move forward, a full application and documentation review are required. Still, a no credit hit mortgage application conversation can reveal whether a conventional option is realistic or whether bank statements, DSCR, or another non-QM path deserves attention before you make an offer.
Richmond homebuyers may still see Colonial 1st Mortgage in older Richmond and Glen Allen directory results. The Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Verify current licensing status through NMLS Consumer Access before making contact with any mortgage company appearing in search results.
FAQ: Non-QM loans in Virginia
1. Is a non-QM loan a bad loan?
No. It can be an appropriate mortgage for a borrower whose income or property profile falls outside conventional guidelines. The key is understanding its cost and documentation requirements.
2. What credit score is needed for non-QM?
Many programs start near 620 FICO, but 680 or higher can improve available terms. Down payment, reserves, and documentation also matter.
3. Can self-employed buyers use bank statements?
Yes. Eligible programs can use 12 or 24 months of bank statements, subject to deposit analysis and business-expense calculations.
4. Can investors use DSCR instead of personal income?
Often, yes. DSCR programs focus on whether expected rent supports the property’s housing payment, along with credit, equity, and reserves.
5. Are non-QM rates always higher?
Not always by the same amount, but they are commonly higher than comparable conventional pricing because the underwriting approach is different.
6. How much down payment is required?
It depends on credit, property type, occupancy, and documentation. Some scenarios may allow 10% down, while others require 20% or more.
7. Can I get prequalified without a hard inquiry?
Yes. A soft-pull review can support early planning without an immediate hard inquiry, though final approval requires a complete file.
8. Why use a broker for a non-QM review?
A broker can compare multiple wholesale investors rather than asking one institution’s program shelf to fit every borrower.
Legal disclaimer: This article is for educational purposes only and is not a commitment to provide financing. Rates, payments, eligibility, reserve requirements, underwriting standards, and program availability can change without notice. All mortgages are subject to application, credit review, income and asset verification, appraisal, title review, and investor guidelines. Consult qualified tax, legal, and financial professionals for advice specific to your situation.
The best next step is a calm, documented review of your income, reserves, credit, and property plan before competition forces a rushed decision.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.