"With mortgage rates expected to remain flat for the foreseeable future, lenders of all sizes are looking for creative ways to attract creditworthy borrowers who may not fit into the conventional loan box. Below are four trends that will enable lenders to expand their reach to new borrowers in 2026: Non-QM lending goes mainstream A big story in 2025 was the growth of non-QM loans, but many of the companies offering these products have been small- and medium-sized lenders."
"Now, some of the largest players in the industry are ready to play a bigger role in serving borrowers who may not meet traditional lending requirements such as self-employed workers, real estate investors, and even influencers but who have good credit scores, a low debt-to-income ratio, and the ability to pay significant down payments. While the pool of qualified non-traditional borrowers is continuing to grow, there are some areas of concern in this sector that the industry will need to focus on."
"These include the growing prevalence of consumer shadow debt (debt not reported to credit bureaus) such as buy now, pay later and cryptocurrency, which will become a critical part of loan underwriting for many lenders in 2026. There has also been increased focus on the default rates of non-QM loans, but in reality, they are mostly comparable with the conventional sector."
"In parallel with the growth in non-QM lending, new credit scoring models VantageScore 4.0 and FICO Score 10T will be embraced by the industry. As more lenders acknowledge the need to help identify creditworthy non-traditional borrowers by providing a more accurate picture of their income and ability to repay loans, acceptance of VantageScore 4.0 and FICO 10T will grow as an alternative to standard credit reports."
Mortgage rates are expected to remain flat, prompting lenders to seek creative ways to attract creditworthy borrowers outside conventional loan criteria. Non-QM lending is scaling beyond small and mid-size firms as major lenders prepare to serve self-employed workers, real estate investors, and influencers with strong credit, low debt-to-income ratios, and sizable down payments. Underwriting will need to account for consumer shadow debt such as buy-now-pay-later plans and cryptocurrency exposure. Default rates for non-QM loans are largely comparable to conventional loans. Adoption of VantageScore 4.0 and FICO Score 10T will help identify qualified non-traditional borrowers and enable broader homeownership.
Read at www.housingwire.com
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