The rising demand for home financing options beyond the agency guidelines is meaningful in today’s mortgage market. That demand is being fueled in large part by current market dynamics: affordability challenges, the rate environment, and diverse borrower profiles – three challenges that are not expected to disappear any time soon.
Non-QM is not just a niche anymore – it’s a necessary addition to every lender’s loan lineup to compete and succeed today and in the future. In this blog, we’ll explain why now is the right time to enter the non-QM sector and how to get started.
Market Drivers Creating Opportunity
Three main drivers make 2025 a favorable time to enter the non-QM space:
Borrower demand:
There has been steady and significant growth in self-employed individuals, gig workers, and real estate investors.Property investor activity:
Investor demand remains strong as rental housing continues to outperform, creating a consistent need for DSCR and other cash-flow-based loan options.Capital markets:
There is a strong appetite for non-QM securitizations, which provides both liquidity and confidence.
Why Lenders Can’t Afford to Wait
Given these market dynamics, lenders cannot afford to sit on the sidelines anymore. By adding non-QM programs to your suite of loan solutions, you will realize a distinct competitive advantage: You will be able to meet borrower needs that your competitors can’t. This allows you to win business in segments of the market that are actively growing, rather than fighting in the commodified arena of conforming loans.
Offering non-QM products diversifies your pipeline, thereby reducing your reliance on traditional loan products that are often slow during refi lulls. This balance ensures steadier deal flow and helps insulate your business from cyclical downturns.
Another consideration is enhanced profitability. Non-QM programs often carry higher margins while targeting an underserved borrower base. That means each closed loan not only helps more clients achieve their goals but also boosts your bottom line in a meaningful way.
Breaking Down the Myths About Non-QM
Despite these advantages, some lenders still hesitate to embrace these products due to lingering misconceptions that have followed this sector since its inception. Let’s set the record straight:
- Non-QM solutions are not subprime: These loans are fully documented, ability-to-repay compliant, and designed for creditworthy borrowers who simply fall outside traditional guidelines.
- Non-QM loans consistently perform well: Historical data demonstrates strong credit quality and low delinquency rates across a variety of borrower profiles.
- Non-QM solutions are fully scalable: With today’s technology and streamlined processes, adopting non-QM programs is easier than ever for lenders of all sizes.
In short, non-QM lending is a safe, reliable, and profitable space – one that forward-looking lenders can’t afford to ignore.
The Product Spectrum Lenders Can Offer
Lenders who enter the non-QM space gain the ability to serve underserved borrowers with solutions tailored to their unique situations:
DSCR loans for real estate investors:
These loans focus on property cash flow rather than personal income, giving investors flexibility and the ability to move quickly on opportunities.Bank statement loans for self-employed borrowers:
Instead of relying on tax returns, these programs use personal or business bank statements to verify income. That means entrepreneurs, freelancers, and small business owners can access financing without being penalized for non-traditional income documentation.Asset Qualifier and Foreign National programs:
These solutions enable borrowers to qualify based on assets or international financials. They open the door for high-net-worth individuals and global buyers who bring strong financials but don’t fit standard underwriting.Expanded jumbo and niche options for unique credit or property profiles:
These programs serve borrowers with high loan amounts or non-traditional circumstances that fall outside conforming guidelines. By offering flexibility, lenders can capture deals that competitors often decline, turning challenges into opportunities.
Together, this wide product spectrum empowers lenders to reach more borrowers, strengthen relationships, and build a diverse, resilient pipeline.
Why Timing is Critical Now
Lenders who act quickly will also be the first to establish stronger referral pipelines with brokers, Realtors®, and borrowers seeking alternatives. In a market where relationships often determine who gets the deal, the ability to approve more loans not only captures market share but also builds loyalty with partners who will continue to send business your way.
At the same time, the non-QM sector has a robust secondary market with strong investor demand. That means there is ample liquidity to support these products, giving lenders the ability to originate confidently and sell non-QM production.
How to Get Started with Non-QM
If you’re ready to step into the non-QM space, success starts with preparation and the right partnerships. Here are three critical first steps to ensuring your success:
- Thoroughly train your origination team. Loan officers need to be confident explaining how these products work, which borrowers they’re best suited for, and how they compare to traditional options. A knowledgeable team builds trust with clients and referral partners alike, making adoption smoother and more effective.
- Align with an experienced wholesale/correspondent investor that specializes in non-QM lending. Partnering with the right investor provides not only access to a full suite of products but also the underwriting expertise, marketing support, and guidance needed to help you grow this channel successfully. A strong partnership ensures you’re not navigating the learning curve alone.
- Lean on technology and support tools to streamline the adoption process. Many non-QM investors now offer advanced platforms that make it easier to submit, track, and close loans with speed and transparency. Leveraging these tools minimizes friction for your team and ensures borrowers enjoy a seamless experience from start to finish.
By investing in training, building the right partnerships, and embracing technology, lenders can launch non-QM confidently and start capturing opportunities right away.
Position Your Lending Business for Growth with Non-QM
Non-QM lending is no longer a hypothetical– it’s a critical growth driver in today’s market. By acting now, lenders can capture unmet borrower demand, strengthen referral relationships, and tap into products with strong margins and investor demand. The timing has never been better to diversify your pipeline and position your business for long-term success. Don’t wait on the sidelines – partner with an experienced non-QM investor like Verus Mortgage Capital today and take the first step toward expanding your reach, profitability, and competitive edge. For more information about Verus, click here.
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.