How Much Down Payment Does a Non-QM Loan Require?
One of the most common questions about Non-QM loans is how much you need to put down. The answer varies by program, credit score, loan amount, property type, and documentation type — but the range is wider and more flexible than many borrowers expect.
Down Payment Is the Flip Side of LTV
Down payment percentage equals 100% minus the maximum LTV allowed. So if a program allows 80% LTV, the minimum down payment is 20%. If it allows 90% LTV, you only need 10% down. Understanding the LTV grid for your specific scenario is the key to knowing what you need.
Owner-Occupied Primary Residence
This is where Non-QM programs can be most flexible. On primary residence purchases, the strongest borrower profiles (high FICO, strong income documentation, loan amount at or below $1M) can access LTVs up to 90%, meaning a 10% down payment. This is comparable to conventional financing with a high credit score.
| Loan Amount | Min Credit Score | Max LTV (Primary Purchase) | Min Down Payment |
|---|---|---|---|
| Up to $1,000,000 | 740 | 90% | 10% |
| Up to $1,000,000 | 660 | 80% | 20% |
| Up to $1,500,000 | 720 | 85% | 15% |
| Up to $2,000,000 | 700 | 80% | 20% |
| Up to $2,500,000 | 700 | 75% | 25% |
Investment Properties
Investment property purchases through income-based Non-QM programs typically allow LTVs up to 80–85% for the strongest profiles, meaning down payments of 15–20%. DSCR investment programs typically cap at 75–80% LTV on purchase, requiring 20–25% down depending on DSCR and credit score.
Second Homes
Second home LTVs fall between primary and investment — typically up to 80–85% on purchase for qualifying profiles, translating to a 15–20% down payment range.
How Credit Score Affects Down Payment
Credit score is one of the primary drivers of maximum LTV on Non-QM programs. Borrowers with FICO scores of 720+ can access the highest LTVs. As the credit score decreases, the maximum LTV decreases accordingly — meaning a larger down payment is required to compensate. Always run your specific scenario to see exactly where you land.
A worked example (illustrative example, not a quote)
Use the grid above for a $900,000 primary residence purchase, with a loan amount under $1,000,000. At a 740 score and 90% LTV, the loan is $810,000 and the down payment $90,000. At a 660 score and 80% LTV, the loan is $720,000 and the down payment $180,000. The credit score difference alone changes the cash needed by $90,000. California closing costs often run roughly 2–5% of the price, adding about $18,000 to $45,000 in either case.
The full cash-to-close picture
- Down payment: 100% minus the LTV you qualify for.
- Closing costs: lender, title, escrow, and prepaid items such as taxes and insurance.
- Reserves: liquid funds left after closing; the amount required varies by program and borrower profile, so we confirm it for your scenario.
- Appraisal and inspection fees paid before closing.
Ways to reduce the cash you need
- Raise your score before applying: pay down revolving balances and resolve any past-due items.
- Ask what the LTV looks like at a slightly smaller loan amount, since the grid steps down as loans get larger.
- Compare owner-occupied versus rental scenarios honestly; occupancy changes the grid.
- Source your funds early. Large deposits need documentation, and unexplained money can reduce what counts.
Frequently asked questions
Can gift funds cover the down payment?
Rules for gifts, retirement funds, and other sources vary by program and borrower profile. Ask before you move money, because sourcing and seasoning rules can affect what is usable.
Why does a bigger loan need a bigger down payment?
The grid above shows maximum LTV falling from 90% to 75% as the loan amount rises. Lenders hold more risk on larger loans, so they ask for more equity.
Is 10% down realistic for most buyers?
It is the best case shown in the grid, reserved for strong credit, strong documentation, and loans of $1,000,000 or less. Plan on a larger down payment unless your scenario clearly fits that tier.
Related guides
- How credit score affects your tier
- Comparing against conventional down payments
- Down payment on investment property
- County loan limits
- Request a rate quote
Key Takeaways
- Non-QM down payments range from 10% to 30%+ depending on the scenario
- As low as 10% down on primary residence purchases for high-FICO borrowers on loans up to $1M
- Investment properties generally require 20–25% down
- Higher credit score = higher max LTV = lower required down payment
- Loan amount, occupancy type, and documentation method all affect the LTV grid
- A 740 score versus a 660 score on a $900,000 purchase changes the down payment from $90,000 to $180,000 (illustrative example)
- Budget for closing costs of roughly 2–5% of the price and for reserves on top of the down payment
- Document the source of your funds early; unexplained deposits can reduce what counts
Serving borrowers throughout California — Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County, and the greater Southern California region including Santa Ana, Irvine, Anaheim, Huntington Beach, Fullerton, Garden Grove, and surrounding communities.