With mortgage rates expected to remain flat for the foreseeable future, lenders of all sizes are looking for creative ways to attract creditworthy borrowers who may not fit into the conventional loan box.
Below are four trends that will enable lenders to expand their reach to new borrowers in 2026:
Non-QM lending goes mainstream
A big story in 2025 was the growth of non-QM loans, but many of the companies offering these products have been small- and medium-sized lenders. Now, some of the largest players in the industry are ready to play a bigger role in serving borrowers who may not meet traditional lending requirements – such as self-employed workers, real estate investors, and even influencers – but who have good credit scores, a low debt-to-income ratio, and the ability to pay significant down payments.
While the pool of qualified non-traditional borrowers is continuing to grow, there are some areas of concern in this sector that the industry will need to focus on. These include the growing prevalence of consumer “shadow debt” (debt not reported to credit bureaus) such as buy now, pay later and cryptocurrency, which will become a critical part of loan underwriting for many lenders in 2026. There has also been increased focus on the default rates of non-QM loans, but in reality, they are mostly comparable with the conventional sector.
VantageScore and FICO 10T gain favor
In parallel with the growth in non-QM lending, new credit scoring models VantageScore 4.0 and FICO Score 10T will be embraced by the industry. As more lenders acknowledge the need to help identify creditworthy non-traditional borrowers by providing a more accurate picture of their income and ability to repay loans, acceptance of VantageScore 4.0 and FICO 10T will grow as an alternative to standard credit reports. This in turn will enable further expansion of the non-QM lending sector, and ultimately lead to increased home ownership throughout the U.S.
50-year mortgages become a reality
In certain areas of the country, many potential first-time buyers are unable to purchase homes due to high interest rates and rising acquisition costs. By enacting a conventional 50-year mortgage product and rolling it out to consumers, a new class of buyers will gain the opportunity to enter the market and begin to build equity, versus having to rent their entire lives. The current administration sees this potential and will be motivated to act on it, especially once the broader industry gets on board.
Some critics of a 50-year mortgage argue that it would not save homeowners a significant amount on their monthly payments, while at the same time burdening them with long-term debt. However, it is important to note that the median time people own a home in the U.S. before selling is only 11 years, according to the NAR 2025 Profile of Home Buyers and Sellers. Furthermore, if history is any indication, 50-year mortgages will have a positive impact on the market – when 30-year products were introduced, more people were able to gain access to homes, which increased competition for new and existing housing stock and ultimately led to a rise in values.
DSCR investor pool expands
According to U.S. Census Bureau estimates, there are roughly 62-65 million people in the U.S. from 20-35, which is historically the prime age range for home purchasing. While nearly all younger adults would like to own a home at some point, a reduction in available inventory, the inability to create new housing in certain markets due to zoning and other challenges, and an overall lack of affordability has made ownership increasingly difficult to achieve.
This dynamic is fueling a strong market for investors with the capital to upgrade and expand the number of available rental units in existing apartment buildings. Increasingly, these investors are using debt-service coverage ratio (DSCR) loans to help them close deals faster than they could with traditional loans. They are also attracted by the product’s use of projected property cashflow to determine whether a loan should be provided, as opposed to the personal income requirements needed for a traditional loan. Larger lenders have recognized this trend and are poised to jump into the DSCR market more fully in 2026.
At the same time, there is a growing risk of occupancy fraud tied to DSCR loans, including recent instances of investors overinflating rent estimates to increase the perceived value of their properties. This will spur more scrutiny from the lending industry, and an increased focus on determining a property’s true rental value.
While 15-year, 30-year, and other conventional mortgages will continue to comprise the majority of home loan products for the foreseeable future, the floodgates are opening for lenders to provide more creative solutions to expand the borrower pool and help more Americans start their journey into homeownership.
Roby Robertson is EVP of Origination Technology Strategy at LoanLogics, a leader in loan technology for the mortgage industry.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].
English (US) · 