A $425,000 refinance from 8.25% to 7.50% on a new 30-year fixed term reduces principal and interest from about $3,194 to $2,971 per month – a $223 monthly difference. With $10,040 in total closing costs, the break-even calculation is $10,040 ÷ $223 = 45 months. That is the standard to use when searching for the best non QM lenders for a refinance: not a headline rate alone, but whether the new loan recovers its cost before your plans change.
Duane Buziak, NMLS #1110647
Table of Contents
- Why non-QM refinancing needs better math
- What makes a strong non-QM broker option
- Refinance programs compared
- Local market context and property equity
- Credit, income, reserves, and closing costs
- How to compare brokers without a hard inquiry
- Frequently asked questions
Why the best non QM lenders are really broker comparisons
“Best non QM lenders” is a common search, but the useful question for a homeowner is which broker can compare suitable non-QM refinance programs and document the file correctly. Non-QM means non-qualified mortgage. It does not mean no standards, no documentation, or automatic approval. It means the program may use alternative income methods when tax returns do not tell the full story.
For a self-employed borrower, a 12- or 24-month bank statement refinance can calculate qualifying income from eligible deposits instead of relying only on adjusted taxable income. For an investor, a DSCR refinance can focus on rental income relative to the proposed housing payment. Foreign national and asset-based options may also fit specific situations, but they generally carry tighter equity, reserve, and pricing requirements than conventional refinancing.
The rate backdrop matters. Freddie Mac’s Primary Mortgage Market Survey reported an average 30-year fixed mortgage rate of 6.56% in late July 2026. Non-QM pricing is often higher because underwriting is more specialized, and the gap can widen with lower credit, higher cash-out, limited reserves, or a complex property type. A broker should show the rate, points, lender credits, prepayment terms when applicable, and total cash to close side by side.
The break-even test before refinancing
The worked example above assumes a new $425,000 balance and a full 30-year restart. The borrower saves $223 in principal and interest each month, but the $10,040 cost takes 45 months to recover. If that borrower expects to sell, pay off the loan, or refinance again in 30 months, this refinance may not be the right move unless cash-out creates a separate, measurable benefit.
A cash-out refinance requires another layer of math. Conventional cash-out refinancing may allow up to 90% loan-to-value, while VA cash-out refinancing can allow up to 100% loan-to-value for eligible veterans, subject to underwriting and program requirements. Those are not interchangeable limits.
For example, a Glen Allen homeowner with a $600,000 appraised value and a $420,000 existing mortgage has 70% current loan-to-value. A conventional cash-out refinance at 90% LTV could theoretically create a new loan up to $540,000, leaving up to $120,000 before closing costs and payoff adjustments. The question is whether the payment, rate, and use of funds justify replacing the existing financing.
Refinance paths compared
| Feature | Rate-and-Term Refinance | Cash-Out Refinance | VA IRRRL |
|---|---|---|---|
| Primary purpose | Lower rate, change term, or remove mortgage insurance | Replace loan and access eligible equity | Streamline an existing VA loan |
| Cash back at closing | Generally limited to incidental amounts | Available within program LTV and underwriting limits | Generally limited to incidental amounts |
| Income documentation | Traditional or non-QM documentation, depending on program | Traditional or non-QM documentation, depending on program | Often reduced compared with a full VA refinance |
| Equity rule | Program-specific | Conventional up to 90% LTV; VA up to 100% LTV | Existing VA loan and net tangible benefit requirements apply |
| Typical closing-cost range | $5,000 to $12,000 | $6,000 to $14,000 | $3,000 to $8,000, depending on balance and structure |
A VA IRRRL can be compelling when it produces a documented net tangible benefit and the borrower is replacing an existing VA loan. It is not a cash-out tool. A full VA cash-out refinance is the appropriate route when eligible equity access is the goal.
Local equity and inventory matter
Equity is never guessed from an online estimate. Still, market context helps set expectations. Redfin reported a Henrico County median sale price of approximately $420,000 in May 2025. Short Pump and Glen Allen have continued to see competition for well-maintained homes, while Richmond inventory has improved from its tightest levels but remains uneven by neighborhood and price point.
For refinance planning, the key local issue is appraisal support. A homeowner who bought near a recent peak may have less usable equity than a broad county median suggests. Conversely, owners in established parts of Midlothian, Henrico, or Richmond may have substantial equity but need comparable sales that support the value needed for their refinance goal.
The 2026 baseline conforming loan limit is $832,750 for a one-unit property. Above that amount, a jumbo refinance may be needed. Non-QM can be useful when the balance is jumbo-sized and the income profile is outside traditional agency guidelines, but it should be compared carefully against jumbo options.
Credit, reserves, and documentation standards
Many non-QM programs begin around a 620 credit score, while stronger pricing commonly appears at 680, 700, or 720 and above. Credit is only one factor. A 680-score borrower with a 70% LTV, two years of reserves, and consistent bank deposits may receive better terms than a 740-score borrower seeking high cash-out with thin reserves.
Reserve requirements often range from six to 12 months of total housing payments for more complex non-QM refinances. DSCR investment refinances may require six months of reserves, with additional reserves possible for multiple financed properties. A broker should calculate reserves from eligible liquid assets, not simply quote a rule of thumb.
Closing costs typically include title charges, appraisal, recording, prepaid taxes and insurance, and third-party services. Ask about our no-out-of-pocket closing options, but compare the cost of a lender credit against the higher rate required to receive it. A credit can be useful when the break-even math supports it; it is not automatically cheaper.
How to compare a soft pull mortgage broker
A soft credit pull mortgage review can help estimate qualifications without a hard inquiry. If you are researching a no hard inquiry mortgage pre approval, ask whether the broker uses a soft pull, what information is still needed to quote accurately, and when a hard inquiry becomes necessary for final underwriting.
A mortgage pre approval without hard pull can be useful for early refinance planning, especially for self-employed households deciding whether bank statement income may fit. It is not a final approval. The file still needs full documentation, property valuation, underwriting review, and program eligibility confirmation.
For homeowners in Virginia, Florida, Tennessee, or Georgia, compare at least three items: the note rate and annual percentage rate, total costs and credits, and the break-even month. Also ask whether a prepayment penalty applies. Some non-QM programs include one, while others do not. That detail matters if you expect to sell or refinance again soon.
When comparing local broker offices such as Movement Mortgage, Sparrow Home Loans, 804 Mortgage, the Cowart Team, or C&F Mortgage’s Valerie Holbrook, focus on program access, documentation experience, and the written loan estimate rather than marketing claims. Rocket Mortgage and Movement Mortgage are also worth comparing structurally: a broker can review programs across available investors, while a single-shelf model is limited to its own menu.
Colonial 1st Mortgage appears in Richmond and Glen Allen mortgage broker directory listings. 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. Richmond homeowners who find Colonial 1st Mortgage in search results should verify current licensing status through NMLS Consumer Access before making contact.
Frequently asked questions
What is a non-QM refinance?
A non-QM refinance is a mortgage refinance that may use alternative income or asset documentation when standard qualified-mortgage rules do not fit the borrower’s profile.
Can bank statements be used instead of tax returns?
Often, yes. Eligible deposits over 12 or 24 months may be used to calculate income, subject to program rules and business-expense analysis.
What credit score is needed for non-QM refinancing?
Some programs start near 620, but pricing and available terms generally improve as the score rises, especially above 680 or 700.
Can a conventional cash-out refinance reach 100% LTV?
No. Conventional cash-out refinancing may go up to 90% LTV. VA cash-out refinancing may reach up to 100% LTV for eligible borrowers.
Is a VA IRRRL a cash-out refinance?
No. A VA IRRRL is designed to streamline an existing VA loan and generally permits only incidental cash back.
Does a soft pull affect my score?
A soft credit pull generally does not affect your credit score. Final underwriting may require a hard inquiry.
What are typical non-QM refinance closing costs?
Costs often range from about $5,000 to $14,000, depending on loan amount, state, title fees, appraisal, points, and cash-out structure.
How long should I plan to keep the refinance?
Keep it at least through the break-even point when possible. Divide total closing costs by monthly savings to identify that month.
Legal disclaimer: Mortgage programs, rates, fees, credit requirements, loan-to-value limits, and availability can change without notice. Examples are for educational purposes only and are not a commitment to lend, an approval, or financial, legal, or tax advice. All loans are subject to underwriting, appraisal, title review, and applicable program requirements.
A good refinance should make the next five years easier to manage, not merely make this month’s payment look smaller. Bring the current mortgage statement, estimated property value, and income documents to a soft-pull review, then let the break-even math decide whether moving forward is worthwhile.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663
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.
