Key facts
- Non-QM borrowers are increasingly diverse, including self-employed workers, real estate investors, high net worth individuals, and foreign nationals.
- Non-QM originations are projected to reach $175 billion this year, up from $108 billion in 2025.
- California, Florida, and Texas remain the largest markets for non-QM lending.
- Griffin Funding's average borrower in 2026 had a 731 FICO score, with 93% of funded volume from non-QM products.
- Investment properties accounted for 56% of Griffin Funding's loans, with 21% involving self-employed borrowers.
- Self-employment has increased in 29 states since 2019, with Rhode Island, Vermont, New Mexico, Nevada, and Arkansas showing significant growth.
The non-qualified mortgage (non-QM) market is experiencing a diversification of its borrower base, moving beyond traditional definitions of poor credit to encompass individuals with complex financial situations. Self-employed workers, real estate investors, high-net-worth individuals, and foreign nationals are increasingly utilizing non-QM and other nonagency products.
Bank of America Securities data projects non-QM originations to climb to $175 billion this year, a significant increase from $108 billion in 2025. This growth is occurring across major metropolitan areas as well as smaller and rural markets, where conventional loan products may not accommodate diverse income structures.
Tom Davis, chief sales officer at Deephaven Mortgage, noted that bank-statement and investor loans are prevalent, often involving high-income, high-net-worth borrowers with substantial down payments. Griffin Funding's first-party production data for 2026 showed an average borrower FICO score of 731, with 93% of funded volume in non-QM products. Investment properties comprised 56% of these loans, and 21% involved self-employed borrowers qualifying through alternative documentation.
While California, Florida, and Texas continue to lead in non-QM lending volume, the borrower pool is becoming less geographically concentrated. Max Slyusarchuk, CEO of AD Mortgage, observes that growth is driven by a rising number of borrowers needing alternative financing, particularly self-employed individuals and real estate investors whose income does not fit traditional underwriting.
The trend of self-employment has accelerated since 2019, with states like Rhode Island, Vermont, New Mexico, Nevada, and Arkansas showing notable increases in self-employed workers. However, Slyusarchuk cautioned that high self-employment rates do not directly correlate with high concentrations of non-QM borrowers.
Florida, in particular, is highlighted as a market where self-employment, wealth, migration, and real estate investment intersect. The state attracts foreign nationals seeking homeownership who may face documentation challenges with conventional loans. Davis noted that over half of condo purchases in South Florida are made by foreign nationals, creating opportunities for lenders offering specialized products.
Real estate investors remain a core segment of non-QM demand. At Griffin Funding, debt-service-coverage ratio (DSCR) loans accounted for 40% of dollar volume. Lyons reported that investors took out home equity loans or lines averaging $354,000 for investment properties in 2025, compared to $152,000 for typical homeowners. Griffin's typical DSCR borrower had a 731 FICO score and a 67.6% average loan-to-value ratio.
Marc Halpern, CEO of Foundation Mortgage, also sees a majority of his loans being investor-based DSCR products, followed by bank-statement loans. He noted that a $11 million non-QM pool being sold by Foundation had an average FICO of 746 and an LTV of 58%, primarily composed of investor loans. Halpern added that securitizers favor non-QM, especially DSCR loans, due to their performance and increasing capital allocation from Wall Street.
These loans are not confined to major investor markets, as some households and investors are moving to smaller, more affordable markets. While Texas, Florida, and California led Griffin's DSCR loan counts, other top markets included Columbia, South Carolina; Lawton, Oklahoma; Indianapolis; and Lincoln, Nebraska.