Isn’t it time the industry rewrites the narrative on non-QM risk? The old misconception that non-QM is a “risky” niche has finally fallen by the wayside. The 2025 reality is this: non-QM loans have delivered a robust performance across a decade of production.
At Verus Mortgage Capital, our unique vantage point as one of the largest non-QM issuers and investors has fueled confidence in this critical sector from our inception in 2015 through today. We have the data that confirms non-agency solutions are not only responsible and valuable lending alternatives, but they’ve also become a mainstream pillar in mortgage finance.
The 2025 Market Context
It’s no secret that this year’s lending environment has been challenging. The high-rate climate, limited agency affordability, and resilient housing demand forced lenders to rethink how to serve today’s diverse borrowers.
This led to significant growth in non-QM lending volume and investor appetite – and created a backdrop that made credit quality performance all the more impressive.
What the Data Shows: Non-QM Credit Performance Surpassed Expectations
The numbers tell a compelling story. In 2025, non-QM credit performance not only held steady – it outperformed many expectations set at the year’s outset. Across the Verus portfolio and broader market benchmarks, delinquency and default rates continued to remain healthy despite broader indications of a late stage credit cycle.
Loan performance has also been consistent across DSCR, Bank Statement, and Asset Qualifier programs, highlighting the resilience of today’s non-QM borrowers and products.
The Foundation: Underwriting Discipline and Data Transparency
Modern non-QM underwriting has evolved into a data-rich, precision-driven process that blends technology with human expertise to evaluate borrowers more holistically. The key elements that define today’s non-QM credit discipline include:
Comprehensive income analysis:
Bank statements, asset documentation, rental cash flow, and other verifiable sources are used to accurately capture borrower capacity – especially for self-employed and investor borrowers.Consistency and accuracy in alternative documentation:
Verifying income and cash flow through non-traditional means has become a cornerstone of responsible non-QM lending, and ensures each loan reflects the borrower’s true financial position.Layered risk evaluation:
Multiple risk factors are assessed together – credit history, reserves, LTV, and cash flow strength – allowing for balanced decision-making rather than overreliance on a single metric.Product-specific modeling:
DSCR, Bank Statement, and Asset Qualifier programs each have purpose-built guidelines that reflect the realities of their borrower segments while maintaining consistent credit standards.Advanced data and analytics:
Modern underwriting leverages automation, quality control technology, and post-close performance tracking to ensure every loan aligns with investor-grade expectations.
This disciplined approach strengthens portfolios and reinforces market confidence, showing that non-QM can deliver both yield and stability when executed responsibly.
Borrower Quality
Non-QM’s strong 2025 performance is driven by the inherent quality of the borrower base. Far from high-risk, today’s non-QM borrowers include self-employed professionals with robust financial profiles, experienced real estate investors with proven rental histories, and high-credit individuals who rely on flexible documentation to access financing.
These borrowers are sophisticated and financially secure, demonstrating that non-QM lending serves creditworthy individuals who may not fit traditional agency molds. Their stability and experience are key contributors to the consistently strong results seen across the sector.
Investor Confidence & Market Validation
Investor confidence in non-QM has grown alongside the market. In 2025, securitization activity increased and spreads tightened, reflecting a market that is rewarding consistent, well-executed lending. Transparent reporting, third-party validation, and careful data oversight have helped investors feel confident that non-QM loans are managed responsibly.
The year also reinforced an important point: non-QM is not “subprime 2.0.” Thoughtful use of technology, analytics, and disciplined capital management has kept risk in check, while responsible product innovation has helped more borrowers access credit without compromising stability. In short, consistent performance builds trust.
Looking Ahead: Sustaining Strong Performance
As we move into 2026, the focus remains on keeping performance strong and consistent. Borrowers are expected to remain financially resilient, and lenders will continue emphasizing disciplined underwriting, thoughtful pricing, and transparent reporting.
For Verus, this means staying committed to responsible growth and data-driven decision-making. The lessons of 2025 show that when non-QM lending is executed carefully, it can deliver stability, access, and opportunity all at once. Looking forward, Verus will continue to set the standard – helping lenders and investors navigate the market with confidence.
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About Verus Mortgage Capital (VMC)
Verus Mortgage Capital (VMC) is the leading investor in non-QM residential loans, providing liquidity, expertise, and trusted partnership to lenders nationwide. With a focus on responsible, scalable growth, VMC empowers mortgage professionals to expand their product offerings and serve a broader range of creditworthy borrowers — confidently and compliantly.