At the 2026 New England Mortgage Expo, Non-QM lending wasn’t being framed as a specialty product or a workaround for difficult files. Now its being considered infrastructure.
That shift came through clearly in conversations with Mike Dattorre, senior account executive at Angel Oak Mortgage Solutions; John Wise, EVP of Sales at Newfi Wholesale; and Allison Ashmore, chief revenue officer at Brokers Advantage Mortgage. Each spoke from a distinct vantage point — originator education, credit risk, and capital markets — but their conclusions aligned.
As equity-rich, self-employed, and investor borrowers collide with rigid agency rules, lenders are turning to Non-QM products that prioritize cash flow, credit quality, and real-world financial behavior. Strong post-Dodd-Frank performance has helped pull even more capital into the space, which suggests an even better year for Non-QM in the year ahead.
From Fringe To Foundation
Dattorre, who has spent eight years in the Non-QM space at Angel Oak, said the shift is visible just by walking the expo floor. Five years ago, Non-QM was often equated with subprime or treated as a niche product few lenders wanted to touch. Now, he said, it dominates conversations.
Still, he encountered a surprising number of people brand new to the business, alongside veteran originators eager to broaden their borrower base. That mix, he said, reflects how normalized Non-QM has become as a production tool.
“It was refreshing actually,” he said. “This is the first year in a while where I met more than three people who were brand new to the business.”
Much of that growth is driven by self-employed borrowers, Dattorre said, who often have strong cash flow but suppress taxable income through business expenses. In the agency world, those borrowers are frequently declined. In Non-QM, particularly through bank statement programs, they can qualify at materially higher loan amounts.
“The bank statement program is a dream come true,” Dattorre said. “You can pretty much guarantee if you have the same borrower and you get their tax returns and then you get their business bank statements, 99.9% of the time that you’ll qualify them for at least $100,000 more using bank statements than their tax returns.”
As rates have remained elevated and inventory tight, those borrowers have not disappeared. Instead, Dattorre said, lenders who understand Non-QM are increasingly capturing deals that would otherwise stall out or be declined.
Credit Discipline
Wise, speaking from the wholesale side at Newfi, reinforced that point with data. He said 2025 was the largest year on record for Non-QM lending, with volume reaching roughly $150 billion out of approximately $2 trillion in total mortgage production. While the broader market was largely flat year over year, Non-QM significantly outpaced it.
At Newfi, Wise said Non-QM production rose about 65% year over year from 2024 to 2025, with similar growth expected in 2026. That expansion, he said, is being driven by originators who need more ways to close loans and by investors who are getting comfortable with the credit performance of Non-QM assets.
But Wise cautioned originators about the risks associated with DSCR lending in particular — especially for “DSCR-only” brokers. The biggest risk in DSCR lending—or any lending—is not the product itself, but credit quality.
Within DSCR, Wise pointed first to occupancy fraud, warning that misrepresenting owner-occupied properties as investment loans remains a non-starter. “The biggest risk for us is just trying to avoid what we call occupancy fraud,” he said. “These are DSCR loans that are really going to be owner occupied, and we want to try and avoid that at all cost.” He cautioned originators not to treat that risk as negotiable, adding, “If you’re originating deals, don’t think that that’s like a layer of fraud that you can accept. It’s not.”
Wise also flagged emerging stress in DSCR loans with ratios below 1.0, where rental income fails to fully cover the mortgage payment. “Second big risk in DSCR is we’re seeing some delinquencies rise in DSCR under one,” he said. “These are properties that don’t positively cash flow, and so there is some risk there.”
As a result, Wise said the DSCR credit box has little room left to expand. “I think the credit box in general for DSCR is about as wide as we can get it,” he said. “I don’t think you’re going to see much expansion there.” Looking ahead, he added, “I think there’s probably a greater risk that the DSCR credit box is going to shrink in 2026.”
That restraint, Wise said, is a key reason Non-QM lending has held up as well as it has. “This is Non-QM has proven to be a skin in the game, lower LTV, higher score borrower that performs really well,” he said, noting that performance has been “certainly better than FHA business.”
“When you originate good credit, there’s all sorts of opportunities that’ll come to you,” Wise added.
‘This is Non-QM 2.0’
Ashmore explained why misunderstandings persist even as Non-QM becomes foundational to modern mortgage lending.
“So when you look at Non-QM, it’s actually a misnomer,” Ashmore said, arguing that much of the industry is still operating off a post–Dodd-Frank framework that no longer governs how loans are classified. In the years immediately following the financial crisis, she said, QM status was tied to safe harbor protections and underwriting benchmarks such as Appendix Q, which included prescriptive limits like a 43% debt-to-income ratio.
“But in Non-QM 2.0, which we’ve been under for a few years now, there actually isn’t really an Appendix Q to follow,” Ashmore said.
Today, she said, the distinction between QM and Non-QM is driven far more by compliance mechanics than borrower risk. “The definition of a QM loan has nothing to do with DTI or things like that,” she said. “But really it’s based on compliance.” Factors such as a loan’s APR, points-and-fees thresholds, and structural features — including interest-only payments or 40-year amortizations — now determine whether a loan falls inside or outside QM tolerances. As a result, Ashmore said, “you could have a full doc jumbo loan that if that borrower received an above-market rate, it would trigger a Non-QM definition.”
That shift, she said, has major implications for how originators assess both risk and borrower fit. “There’s sort of a hangover from post–Dodd-Frank that Non-QM equals a bank statement loan,” Ashmore said. “We do bank statement QM loans all day long because it’s only a designation of compliance.”
As borrowers increasingly fall outside rigid agency boxes because their income, equity, or financing needs don’t align neatly with legacy rules, Ashmore said loan originators must rethink their role in the transaction.
“You have to know your borrower and have that conversation from a human level and figure out, okay, what are you trying to achieve and how can I help you and what are the options?” she said. “A loan originator needs to think of themselves like a financial consultant.”
That expectation, Ashmore said, is rising quickly as borrowers become more sophisticated about their options. “Borrowers are becoming more informed as well,” she said, pointing to the growing role of AI tools and online research in shaping consumer behavior. She cited an industry statistic showing that SEO searches for “equity lending” or “equity extraction” jumped 125% toward the end of the fourth quarter — a signal that homeowners are actively reassessing how to deploy locked-in equity.
“If a consumer has more information than the loan officer, that loan officer needs to quickly get up to speed,” Ashmore said. Otherwise, she added, “that loan officer is going to lose out on the business.”
