With mortgage rates expected to remain low for the foreseeable future, lenders of all sizes are looking for creative ways to attract borrowers who may not fit into the traditional loan box.
Below are four trends that will allow lenders to increase their reach to new borrowers in 2026:
Non-QM loans go first
The big story in 2025 was the growth of non-QM loans, but most of the companies offering these products were small and medium-sized lenders. Now, some of the biggest players in the industry are poised to play a bigger role in serving borrowers who may not meet traditional lending requirements – such as the self-employed, real estate investors, and even influencers – but who have good credit scores, a low credit-to-income ratio, and the ability to pay low payments.
While the pool of qualified non-traditional borrowers continues to grow, there are certain areas of concern in this sector that the industry will need to focus on. This includes the growing consumer “shadow credit” (debt not reported to credit bureaus) such as buy now, pay later and cryptocurrency, which will be an important part of the loan underwriting of many lenders in 2026. There is also an increasing focus on non-QM loan default rates, but in reality, most of them are comparable to the general sector.
VantageScore and FICO 10T are gaining favor
Along with the growth of non-QM lending, the industry will adopt new credit score models VantageScore 4.0 and FICO Score 10T. As more lenders recognize the need to help identify non-traditional borrowers by providing a more accurate picture of income and credit-paying ability, adoption of VantageScore 4.0 and FICO 10T will increase as an alternative to traditional credit reports. This will allow for further expansion of the non-QM lending sector, and ultimately lead to increased home ownership across the US.
50 year mortgages become a reality
In some areas of the country, many potential first-time buyers are unable to purchase homes due to high interest rates and rising acquisition costs. By creating a standard 50-year mortgage product and passing it on to consumers, a new class of consumers will have the opportunity to enter the market and start building equity, as opposed to renting for the rest of their lives. Current management recognizes this potential and will be motivated to act on it, especially once the industry at large has taken off.
Some critics of the 50-year mortgage say it won’t save homeowners much in their monthly payments, while at the same time burdening them with long-term debt. However, it’s important to note that the average time people can own a home in the US before selling is only 11 years, according to the NAR 2025 Profile of Home Buyers and Sellers. In addition, if history is any indication, 50-year mortgages will have a positive impact on the market – when 30-year mortgages are introduced, more people have access to housing, which increases competition for new and existing housing and ultimately leads to higher prices.
DSCR’s investor pool is growing
According to US Census Bureau estimates, there are approximately 62-65 million people in the US from the age of 20-35, which is the prime age range for buying a home. While nearly all young adults would like to own a home at some point, the shrinking supply, the inability to build new homes in certain markets due to zoning and other challenges, and the overall lack of affordability have made ownership difficult to achieve.
This trend is fueling a strong market for high-net-worth investors to develop and expand the number of rental units available in existing buildings. Increasingly, these investors are using debt-service coverage ratio (DSCR) loans to help them close deals faster than with traditional loans. They are also attracted to the product’s use of the property’s projected cash flow to determine whether a loan should be offered, as opposed to the personal income requirements required to obtain a conventional loan. Major lenders have seen this trend and are ready to jump into the DSCR market fully by 2026.
At the same time, there is a growing risk of residential fraud linked to DSCR mortgages, including recent cases of investors inflating rents to increase the perceived value of their properties. This will encourage more scrutiny from the lending industry, and more focus on determining the true rental value of a property.
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 offer more creative solutions to expand the pool of borrowers and help more Americans begin their home ownership journey.
Roby Robertson is EVP of Origination Technology Strategy at LoanLogics, a leader in loan technology in 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].
