Quick Answer
Points are available on some non-QM loans, and because non-QM rates run higher than agency loans, the dollar savings from each point can be larger. The catch is that not every non-QM lender offers points at all, so we verify pricing before we plan on them. If points are off the table, lender credits or a larger down payment become the levers. Ask Patrick how points on non-QM loans would work for your loan.
Here is the money problem, Patriot Nation: you need a non-QM loan because your income does not fit the standard box, and the rate on that loan runs higher than the agency stuff, which means every point you buy saves you more actual dollars. The catch is that not every non-QM lender even offers points. Get the pricing verified first, then decide whether the buydown is worth your cash.
What points do on a non-QM loan
A discount point is 1% of your loan amount paid at closing to lower your rate. On a non-QM loan, the base rate starts higher than a qualified mortgage, so the same point buys a rate reduction on a bigger number. The term to know is basis points: each point typically moves the rate in quarter-percent steps, and on a loan that starts at 8.5%, that quarter point means more dollars than it would on a loan starting at 6%.
The meaning in plain English: points work the same everywhere, but the starting rate decides how much each point is worth in your pocket.
The money side: a quarter-point cut on a higher rate saves more actual dollars per month, which is the whole reason non-QM points get interesting.
The real-world consequence: verify the lender's point schedule before you plan on it, because non-QM pricing is not standardized.
Why the dollar savings run larger
The dollar savings from a point are bigger on a non-QM loan because the starting rate is higher. On a DSCR loan at 8.5% for an investment property, one point might reduce the rate to 8.25%, saving about $52 a month on a $300,000 loan. Some non-QM lenders offer aggressive point pricing because the margins on these loans are wider, so the same dollar of point cost can buy more rate than on an agency loan.
The meaning: the higher the base rate, the more each point earns, which is the silver lining of a non-QM loan.
The money side: about $52 a month on a $300,000 loan adds up to real cash over the life of the loan.
The real-world consequence: shop the point grid across non-QM lenders, because the pricing varies far more than on agency loans.
The catch: not every lender offers points
Non-QM pricing is set by each lender's own appetite, and some non-QM lenders simply do not offer discount points at all. Ask the direct question early: do you offer points, and what is the rate reduction per point? If points are off the table, the levers become lender credits, a larger down payment, or shopping a different non-QM lender.
The meaning: on non-QM, the rate sheet is the lender's own document, and points are a feature, not a guarantee.
The money side: a lender that offers no points may still win on the base rate, so compare the all-in cost, not just the point option.
The real-world consequence: one direct question at the start saves you from building a plan around a pricing feature that does not exist.
A worked example on a $300,000 DSCR loan
Take a $300,000 DSCR loan at 8.5% for a rental. One point costs $3,000 and might bring the rate to 8.25%, saving about $52 a month. That is a break-even near 58 months, roughly five years. Two points cost $6,000 and might save about $104 a month, with the break-even in the same neighborhood. If you plan to hold the rental past the break-even, the point pays for itself and then keeps paying.
The meaning: the break-even is the point cost divided by the monthly savings, and it is the number that decides the deal.
The money side: hold past five years and the savings are pure gain; sell or refinance before it and the point cost is spent.
The real-world consequence: run the break-even with your real rate and real loan amount, because the example only shows the shape of the math.
When points on a non-QM loan actually win
Points win when you can afford the upfront cash, plan to hold the loan past break-even, and the lender's point pricing is real. They lose when your cash is tight, because non-QM borrowers often choose these loans precisely because traditional income documentation is not available, and that can mean less cash at closing. If buying points drains your reserves, the lower payment is not worth the risk.
The meaning: the point decision is a cash and timeline decision, not a rate decision.
The money side: reserves protect you when the rental sits empty or the business hits a slow month, and no rate discount replaces that.
The real-world consequence: run the break-even with your real numbers before you commit, and make it a great one.
Ask Patrick about points on non-QM loans
Get a straight answer on points on non-QM loans and whether paying points makes sense for your loan.
