As mortgage lenders contend with elevated interest rates and shrinking pools of qualified buyers, non-qualified mortgage (non-QM) loans are emerging as a critical lever for growth.  

Roby Robertson, EVP at LoanLogics, discusses how non-QM products are gaining traction with lenders seeking to serve creditworthy borrowers who fall outside conventional loan criteria. With S&P Global projecting that non-QM loans will account for nearly 30% of non-agency mortgage-backed securities in 2025, Robertson explains how these loans offer both revenue potential and underwriting complexity.  

Robertson offers practical advice for lenders entering the space, shares borrower trends, and outlines how technology will be key to scaling compliant, profitable non-QM operations in today’s evolving mortgage landscape.  

CM: Why are non-QM loans gaining so much traction right now?  

RR: Over the past several years, we have seen higher interest rates and economic uncertainty reduce the number of potential home buyers who are able to qualify for a conventional home mortgage. Lenders looking for new avenues of growth are recognizing that many borrowers with good credit scores and substantial income do not meet traditional lending requirements for various reasons. Non-QM loans are helping to fill that void.  

CM: How do these loans compare to traditional loans in terms of profitability for lenders?  

RR: Non-QM loans tend to generate higher profits than traditional loans due to their complexity and the borrowers they serve. These loans usually require more extensive underwriting and due diligence, which lenders can offset by charging higher rates and fees. Non-QM borrowers, who either do not meet or are not interested in the stringent criteria of agency or conventional loans, are often more willing to pay a premium for access to tailored lending solutions.  

CM: How has the borrower profile for non-QM loans evolved in recent years?  

RR: Non-QM loan volume generally follows market cycles. When interest rates began to cool in late 2022, many loans initially intended for conventional sale were reclassified as non-QM due to late-stage issues like credit score or debt-to-income (DTI) ratio.  

As a result, the non-QM deals from that period carried higher risk—something that became evident with increased late payments in 2023 RMBS portfolios. In response, the industry shifted its focus to non-QM borrowers with strong credit profiles but unconventional income or asset documentation. These newer loans are proving to be both more profitable and lower risk than those originated in late 2022.  

CM: Are there certain geographies or borrower types where non-QM is seeing especially strong growth?  

RR: Non-QM loans are typically offered to borrowers with non-traditional income sources—such as self-employed individuals, freelancers, contractors, landlords, or those with substantial assets but irregular income. Conventional loan guidelines are built around predictable monthly cash flow, requiring borrowers to document income and expenses in standardized ways. However, today’s economy is shifting, with more Americans earning revenue through alternative channels like gig platforms and online marketplaces, and it is in this expanding segment of borrowers where we are seeing the strongest non-QM growth.   

CM: Do you see these products becoming a core part of the mortgage market, or will they remain niche?  

RR: Conventional lending will always remain the leader in mortgage originations. But with interest rates anticipated to stay higher for longer, traditional mortgage requirements continuing to be quite stringent, and the number of Americans making their income in non-traditional ways, we believe non-QM loans will play a growing role in the market. However, to remain profitable in the space, lenders will need to be able to leverage technology that can handle the complex nature of these types of mortgages and ensure data integrity.  

CM: For lenders just entering the space, what advice would you give on building a scalable, compliant process?  

RR: Focus on borrowers with good credit, strong income, and attractive assets who may not qualify for a conventional loan because they earn their money in non-traditional ways. Using technology to automate routine loan processes can also help smooth the process, resulting in time and cost savings for lenders as well as borrowers.  

CM: What is your outlook for the mortgage industry in the coming years, especially regarding non-QM loans and market trends?   

RR: We feel strongly that non-QM loans and other creative product offerings will continue to become more prevalent as lenders look for new growth opportunities and use technology to offer non-traditional loans to qualified borrowers, including first-time homeowners who might otherwise be locked out of the market.