One of the defining features of Non-QM HELOC programs is the variety of income documentation methods available. Here is an overview of the most common options offered by Non-QM lenders in California.

Bank Statement Income

The lender uses 12 or 24 months of personal or business bank statements to calculate qualifying income. Deposits are analyzed, a business expense factor is applied (typically 40%–50% for business accounts), and the resulting average monthly net deposit is used as qualifying income. This is ideal for self-employed borrowers who write off significant expenses on their taxes.

1099 Income

For independent contractors and gig workers, some Non-QM lenders qualify income using 1–2 years of 1099 forms rather than full tax returns. The income shown on the 1099s is used directly, without the reductions that come from Schedule C deductions.

Asset Depletion

For high-net-worth borrowers with significant liquid assets, asset depletion converts the asset balance into a monthly income figure by dividing an eligible percentage of assets by a set number of months (typically 120). This allows qualification without traditional employment or investment income.

DSCR (Debt Service Coverage Ratio)

For investment properties, DSCR programs qualify based on whether the property’s rental income covers the monthly loan payment — rather than the borrower’s personal income. No personal income documentation is required for DSCR qualification.

Full Doc

Some Non-QM HELOC programs also accept full documentation (tax returns, W-2s) for borrowers who qualify but need other Non-QM accommodations — such as higher LTV, recent credit events, or unique property types.