The next Non-QM deal may not require another lead source.
It could be an investor whose deal didn't work a year ago. A self-employed borrower sitting in an originator's CRM. A homeowner who needs cash but doesn't want to disturb a first mortgage. Or a past client who owns three rental properties instead of one.
With Non-QM taking a larger share of mortgage production, executives from three lenders say one of the biggest opportunities for originators heading into the final months of 2026 is surprisingly simple: get better at finding and structuring the business already within reach.
That was one of the key takeaways from National Mortgage Professional's Non-QM Town Hall: What Originators Are Doing To Finish The Year Strong, held Sept. 24.
Moderated by NMP CEO Andrew Berman, the webinar brought together Aaron Leffler, CEO of Brokers First Funding; Delfino Aguilar, chief production officer at Kind Lending; and Nick Pabarcus, managing director of Non-QM sales at Pennymac TPO.
The panel covered which Non-QM products are actually producing volume, where originators can find more self-employed and investor borrowers, what's happening in the secondary market, and how top producers are positioning Non-QM inside their businesses heading into 2027.
The conversation comes as Non-QM continues to take a larger piece of mortgage production.
Non-QM and expanded-guidelines loans captured 11.3% of mortgage rate-lock volume in August, the highest share in Optimal Blue's three-year chart. Investor and DSCR loans accounted for 35.1% of Non-QM production, while bank-statement loans represented another 29.8%.
Those numbers help explain why the panel's conversation wasn't about whether originators should pay attention to Non-QM.
It was about how to get better at it.
Start With The Products That Actually Fund
Non-QM lenders continue to introduce increasingly specialized products, but Pabarcus cautioned originators against confusing attention with volume.
He said DSCR represents roughly a third of the production Pennymac is seeing. Combine DSCR with full-documentation and bank-statement loans, he said, and those three categories account for roughly 85% of the market.
By comparison, Pabarcus pointed to no-ratio loans as an example of a product that attracts plenty of attention despite representing a tiny portion of recent securitization volume.
"If I were a newcomer to the Non-QM space, I'd focus on those three other doc types," Pabarcus said. "Your DSCR, your full doc, and your bank statements."
The latest Optimal Blue data supports the emphasis on investor lending. Investor and DSCR loans accounted for 35.1% of August Non-QM production, up 6.66 percentage points from a year earlier.
Aguilar said bank-statement lending is also becoming far more commonplace.
"There's a lot of need for the bank statement program right now," he said.
At a recent broker roundtable, Aguilar said, every participant reported having closed a bank-statement loan during the prior month. Earlier roundtables produced a much different response, with relatively few brokers raising their hands.
"It's no longer a niche product," Aguilar said. "It's a way to build your business."
Leffler pointed to another opportunity particularly suited to today's rate environment: second liens.
Homeowners may need access to equity without wanting to replace their existing first mortgage, creating an opening for Non-QM HELOCs and closed-end seconds.
"Maybe it's not the right time for them to approach their first mortgage in a full cash-out refinance," Leffler said. "Look at the second mortgages as an option right now."
That opportunity is also showing up in the secondary market. Angel Oak Mortgage REIT purchased $204 million in newly originated Non-QM mortgages and HELOCs during the second quarter, approximately 39% more than a year earlier. The company expects HELOCs to represent 10% to 15% of its overall allocation.
Before Buying More Leads, Search The CRM
Where should an originator find the borrowers?
The panel repeatedly came back to existing data and relationships.
Leffler recommended searching historical loan data for investment properties, self-employed borrowers, and applicants whose deals previously couldn't be completed.
"Look at your data and find investors," Leffler said. "I want to fish where I know there are people who have a higher need for this particular product."
It's an approach NMP heard from originators and Non-QM executives at Originator Connect this summer. Their advice included identifying self-employed borrowers already in the database, contacting former bank-statement clients about equity needs, and revisiting borrowers rejected under agency guidelines.
Aguilar similarly urged originators to go back through previously denied self-employed borrowers and then expand outward through those relationships.
One broker he recently spoke with asks self-employed clients a remarkably simple question: Do you know other entrepreneurs?
"Usually, they do," Aguilar said.
CPAs, tax preparers, Realtors, investor groups, and professional organizations can provide additional entry points. But Aguilar said the originators he sees succeeding are also willing to prospect outside their normal routines.
"Be comfortable with the uncomfortable," he said. "They're not embarrassed to just walk up and talk to people."
For originators already working with real estate investors, Pabarcus said the relationship can continue generating business well after the initial closing.
"When DSCR interest rates go down, you get rate-and-term or cash-out with the multipacks," he said. "Five, seven, 10 of those loans come in."
Even when a refinance doesn't make sense today, he said, maintaining the relationship positions the originator for the next transaction.
Plenty Of Money Is Chasing Non-QM
Originators aren't the only ones paying more attention to the sector.
Private credit funds, insurers, and other institutional investors have been pouring capital into Non-QM.
NMP's September cover story examined the money flowing into the market and who ultimately owns the risk. Bank of America Securities has projected Non-QM securitization issuance will reach approximately $100 billion this year, up 46%, with DSCR and investor loans accounting for a significant portion of issuance.
Angel Oak executives have also pointed to additional insurance-company capital entering the market and described Non-QM securitization demand as healthy, with active buyers.
Pabarcus sees that appetite firsthand.
"The market is very frothy," he said. "There's no lack of liquidity for Non-QM as it sits today."
More capital and lender competition can improve pricing and product availability for originators, but Pabarcus said competition also creates pressure on margins and, potentially, credit standards.
The question becomes how lenders maintain the guardrails that have supported loan performance while competing for more production.
Why The Rate Sheet Keeps Moving
Strong liquidity doesn't mean Non-QM pricing will move in lockstep with conventional mortgages.
Pabarcus said originators need to understand that the forces behind Non-QM pricing can differ from those affecting agency loans.
Non-QM loans tend to have shorter duration, he explained, making movements in the five-year Treasury particularly relevant. Investor demand, securitization execution, loan performance, and the composition of a lender's pipeline can also influence pricing.
That can lead lenders to adjust loan-level price adjustments frequently as they manage their production mix and secondary-market execution.
"Most investors and lenders are going to be changing their LLPAs quite a bit, several times a month probably, to go ahead and ensure that balance is struck," Pabarcus said. "So if you like it, make sure to lock it."
For originators accustomed to watching conventional mortgage rates and the 10-year Treasury, that can require a different way of thinking about a rate sheet.
An Exception Today Could Become A Guideline Tomorrow
Another difference is the role of exceptions.
Leffler said approximately 30% of Brokers First Funding's business involves exceptions.
But in a market where investors are willing to buy loans outside a lender's standard box, repeated exceptions can eventually influence the box itself.
"If we're making the same exception over and over again, and I'm getting a market price for that loan, it should be a guideline," Pabarcus said.
Aguilar said Kind tracks the exceptions moving through its operation to identify potential changes and help its account executives understand where flexibility may exist.
"If it's an exception, we should look at it," Aguilar said. "But the flip side of that is: How do these loans perform?"
Leffler said flexibility doesn't eliminate the fundamentals of underwriting. Credit history, the property, and the circumstances behind the loan still matter.
"This business is based on people," Leffler said. "The people that we're serving have stories in their lives."
That makes communication particularly important on loans that don't fit neatly within published guidelines.
There's No AUS Coming To Save The File
The panel's discussion of pull-through brought the conversation back to execution.
Leffler said Brokers First Funding is seeing roughly 60% to 65% pull-through from underwriting submission to funding and about 85% from lock to funding.
Originators can improve those odds, he said, by doing more work before the file reaches underwriting.
"Know what you're doing going in," Leffler said.
Aguilar similarly emphasized using lender-provided income calculators and qualification tools before presenting a borrower with an option.
"Getting the information up front" allows an originator to more accurately determine what is possible, he said.
That confidence can carry beyond the individual transaction.
"It builds confidence and that builds referrals," Aguilar said.
Technology can help with the calculations, but Pabarcus cautioned against assuming it eliminates the need to understand the loan.
"There's no AUS coming to save you in the near term," he said.
Short-term rentals, bank-statement expense factors, reserves, and other requirements can be treated differently from one lender to another. That makes the account executive's, and originator's product knowledge more important.
Pabarcus offered one rule for particularly complicated files:
"Don't hold anything back," he said. "Tell us up front, and we'll be able to help you structure."
Aguilar agreed that lender selection should include more than a comparison of rates.
"Each one of these loans needs an advocate for them at times," he said.
What To Do Before Dec. 31
Berman closed the discussion by asking each executive for one thing an originator could do before year-end to make Non-QM move the needle.
Their answers approached the same challenge from three different directions.
For Leffler, it starts with attitude, education, and activity.
"Your attitude, learn a little bit more, and do a lot," he said. "Go get it."
Aguilar emphasized building repeatable habits rather than treating Non-QM education as something to get to when a difficult borrower appears.
"What are the disciplines that you're putting in place to separate yourself from your competition?" Aguilar said.
“If you’re disciplined, have a routine, learn Non-QM, reach out and stick to those things, you’ll win going into 2027.”
Pabarcus focused on choosing the right lender.
With scores of wholesale Non-QM options available, he urged originators to consider technology, operations, capital-markets infrastructure, and the people supporting the transaction alongside price.
"We are partners having to perform for your borrower," Pabarcus said, "and you only look good if we're there to support you."
The market data suggests the opportunity is already there. Non-QM's share of mortgage locks has climbed to a three-year high, investor and DSCR lending is gaining ground, and more institutional capital is competing to buy the loans.
For originators, the panel's year-end playbook was considerably less complicated: master the products producing most of the volume, search the borrowers and relationships already within reach, bring the lender into difficult files early, and get better at turning the opportunities already in the pipeline into closed loans.
Watch the full Non-QM Town Hall and find upcoming NMP webinars here.
