With mortgage rates anticipated to stay flat for the foreseeable future, lenders of all sizes are in search of artistic methods to draw creditworthy debtors who might not match into the traditional mortgage field.
Under are 4 traits that can allow lenders to increase their attain to new debtors in 2026:
Non-QM lending goes mainstream
An enormous story in 2025 was the expansion of non-QM loans, however most of the corporations providing these merchandise have been small- and medium-sized lenders. Now, among the largest gamers within the trade are able to play a much bigger function in serving debtors who might not meet conventional lending necessities – resembling self-employed employees, actual property buyers, and even influencers – however who’ve good credit score scores, a low debt-to-income ratio, and the power to pay vital down funds.
Whereas the pool of certified non-traditional debtors is constant to develop, there are some areas of concern on this sector that the trade might want to deal with. These embody the rising prevalence of shopper “shadow debt” (debt not reported to credit score bureaus) resembling purchase now, pay later and cryptocurrency, which is able to grow to be a crucial a part of mortgage underwriting for a lot of lenders in 2026. There has additionally been elevated deal with the default charges of non-QM loans, however in actuality, they’re largely comparable with the traditional sector.
VantageScore and FICO 10T achieve favor
In parallel with the expansion in non-QM lending, new credit score scoring fashions VantageScore 4.0 and FICO Score 10T will likely be embraced by the trade. As extra lenders acknowledge the necessity to assist establish creditworthy non-traditional debtors by offering a extra correct image of their revenue and talent to repay loans, acceptance of VantageScore 4.0 and FICO 10T will develop as an alternative choice to customary credit score studies. This in flip will allow additional enlargement of the non-QM lending sector, and in the end result in elevated dwelling possession all through the U.S.
50-year mortgages grow to be a actuality
In sure areas of the nation, many potential first-time consumers are unable to buy properties as a consequence of excessive rates of interest and rising acquisition prices. By enacting a standard 50-year mortgage product and rolling it out to customers, a brand new class of consumers will achieve the chance to enter the market and start to construct fairness, versus having to lease their total lives. The present administration sees this potential and will likely be motivated to behave on it, particularly as soon as the broader trade will get on board.
Some critics of a 50-year mortgage argue that it will not save householders a big quantity on their month-to-month funds, whereas on the identical time burdening them with long-term debt. Nonetheless, it is very important observe that the median time individuals personal a house within the U.S. earlier than promoting is barely 11 years, in accordance with the NAR 2025 Profile of Home Buyers and Sellers. Moreover, if historical past is any indication, 50-year mortgages can have a constructive impression in the marketplace – when 30-year merchandise had been launched, extra individuals had been capable of achieve entry to properties, which elevated competitors for brand new and current housing inventory and in the end led to an increase in values.
DSCR investor pool expands
In response to U.S. Census Bureau estimates, there are roughly 62-65 million individuals within the U.S. from 20-35, which is traditionally the prime age vary for dwelling buying. Whereas practically all youthful adults wish to own a home at some point, a discount in obtainable stock, the shortcoming to create new housing in sure markets as a consequence of zoning and different challenges, and an total lack of affordability has made possession more and more troublesome to realize.
This dynamic is fueling a robust market for buyers with the capital to improve and increase the variety of obtainable rental items in current condo buildings. More and more, these buyers are utilizing debt-service protection ratio (DSCR) loans to assist them shut offers quicker than they may with conventional loans. They’re additionally attracted by the product’s use of projected property cashflow to find out whether or not a mortgage must be supplied, versus the non-public revenue necessities wanted for a standard mortgage. Bigger lenders have acknowledged this pattern and are poised to leap into the DSCR market extra absolutely in 2026.
On the identical time, there’s a rising danger of occupancy fraud tied to DSCR loans, together with current situations of buyers overinflating lease estimates to extend the perceived worth of their properties. It will spur extra scrutiny from the lending trade, and an elevated deal with figuring out a property’s true rental worth.
Whereas 15-year, 30-year, and different standard mortgages will proceed to comprise nearly all of dwelling mortgage merchandise for the foreseeable future, the floodgates are opening for lenders to offer extra artistic options to increase the borrower pool and assist extra Individuals begin their journey into homeownership.
Roby Robertson is EVP of Origination Know-how Technique at LoanLogics, a pacesetter in mortgage expertise for the mortgage trade.
This column doesn’t essentially replicate the opinion of HousingWire’s editorial division and its homeowners. To contact the editor chargeable for this piece: [email protected].
