In 2026, those products will include non-agency loans, or loans that are not backed by Freddie Mac, Fannie Mae, or other government sponsored entities (GSEs). Industry leaders expect that one out of every four or five loan originations will involve a non-agency mortgage, adding up to about $400 to $500 billion in sales. Broken down into smaller buckets:

• Originations of Non-QM loans such as bank statement and debt service coverage ratio (DSCR) products will reach $150 billion to $180 billion
• Second-lien originations could hit $150 to $160 billion
• Sales of other non-agency products such as residential transition loans (RTLs) will be substantial, as well

Following are strategies to help originators gain a competitive advantage in the non-agency mortgage segment.

Increase Non-QM Sales By “Rescuing” The Underserved

Non-QM loans, which fall outside of traditional guidelines, have been a lifeline for underserved borrowers. For example, there are 15 million self-employed individuals within the U.S., many of whom can’t qualify for a traditional, government-backed loan based on their tax returns, such as the information on their W-2 forms.

However, these borrowers might qualify for a mortgage through a Non-QM bank statement loan based on verifying income using 12 or 24 months of bank statements, 1099s, and one-year profit and loss statements. Bank statement loans can be especially helpful when self-employed borrowers’ tax strategies underrepresent their reported income. By presenting a more complete picture of their financials through this alternative documentation, borrowers may even qualify for a larger loan than they anticipated.

Tap Into The Robust Investor Market

To fully serve the nation’s homebuyers, originators need mortgage products for investors. According to Cotality, from January 2025 through October 2025, investors were responsible for a little under one third of U.S. home purchases. Experts expect that they will continue to be active buyers of income properties in 2026, as well.

Many of these investors form strong relationships with originators who specialize in Non-QM debt service coverage ratio (DSCR) mortgages. Business-purpose buyers, including individuals and those borrowing through their limited liability corporations (LLCs), qualify for these mortgages based on their property cashflow or the ratio of their rental income to their monthly payment obligations, including principal, interest, homeowners insurance, property taxes, and HOA fees. This alternative qualification process streamlines approvals, which is especially helpful when buyers are competing with other investors for the same property, and have a small window of time to make an offer.

The DSCR loan process is also helpful to borrowers who already have more than 10 income properties, the maximum number they can finance through agency loans.

Second Liens: Meet Borrowers’ Cash Flow Needs

To maximize sales growth in today’s challenging mortgage industry, originators must be able to help borrowers take full advantage of their real estate wealth, even when they’re not buying or selling their homes. Being fluent in equity products, including closed-end second liens and HELOCs, provides them with this additional opportunity. It can also help them fend off potential competitors, such as servicers with an aggressive borrower recapture strategy.

The borrowers in an originator’s database may have a current need for these equity products. For example, there is a strong market for products that help homeowners consolidate their debt. Americans currently shoulder more than $1.6 trillion in auto loans, over $1.2 trillion in credit card debt, and in excess of $1.6 trillion for their student loans. Many homeowners use second-lien products to drive that debt down.

An originator’s existing borrowers may also need cash for home renovations which is another popular second-lien application. It’s well known that many homeowners are postponing their home-selling plans, and January’s 8.4% drop in existing home sales is another illustration of this trend. However, with the age of the average U.S. home hovering between 40 and 50, some owners want or need to expand, improve, or update their properties. They, too, need an originator who can educate them on the nuances of closed-end seconds and HELOCs.

A few years ago, cash-out refinancing was popular among homeowners and investors who needed funds to make these improvements. Now, they prefer to keep their first low interest rate and look for a second lien option. Eighty-five percent of Americans are paying off mortgages with interest rates below 5%. By choosing a CES or HELOC, they can maintain their current mortgages, and pay higher rates only on a smaller second lien product. And if they are self-employed or are fixing up an investment property, they also benefit from having bank statement or DSCR options to qualify.

Help Meet The Need For More Inventory

America has a shortfall of 4.7 million housing units, according to a Zillow analysis of U.S. Census data. Not only are investors, builders, and developers jumping in to solve the problem; they’re seeking originators to help finance their projects with short-term residential transition loans (RTLs). Business-purpose borrowers rely on these products to finance ground-up construction or fix and flips, and also as bridge loans to expand their portfolios. Industry leaders project that RTL originations will reach $30 billion to $35 billion this year. Many originators do not yet have expertise in this niche, which can be a fertile source of new and repeat business, as builders and investors ramp up their efforts to fill housing gaps.

Matching The Right Products To The Right Buyer

From Non-QM bank statement loans to RTLs, the non-agency lending segment offers many product alternatives for borrowers and investors whose financing options would otherwise be much narrower. The ability to offer multiple custom solutions in order to solve a single problem — or advance a single opportunity — is another reason non-agency products can be such important sales drivers for LOs.

For example, a self-employed borrower looking to finance her first income property could benefit from a Non-QM bank statement loan, a DSCR loan, a Non-QM home equity loan, or HELOC. Her originator could recommend two to three alternative products, terms, and features based on a variety of factors — such as her desired closing timetable, the size of the loan that she needs, LTV and DTI ratios, and current interest rates.

Expert lenders focused on the non-agency space offer scenario desks to help originators offer at least one, and often more than one, solution. They also train their partners on specific products, and participate with them in marketing initiatives, from emails to presentations and webinars. Simultaneously, originators who want to increase non-agency product sales should consider:

• Continually monitoring and segmenting their databases to identify second lien and other product marketing opportunities based on borrowers’ equity, the age of their homes, and other factors.
• Focusing the topics they cover during business networking group meetings on the needs of those in attendance. If meetings attract a large concentration of self-employed people, for instance, members may appreciate learning more about Non-QM bank statement loans.
• Zooming in on referral sources who might have mortgage needs themselves. Many Realtors, for instance, are also property investors.

Finally, be open to every possibility that non-agency lending affords. In both up and down markets, the more originators can tune into borrowers’ current needs, and have products ready for them, the better positioned they are to succeed. Becoming an expert in the non-agency space gives them a variety of ways to assist new borrower segments, laying the foundation for additional revenue growth.