Non‑qualified‑mortgage (non‑QM) lending hit $239 billion in 2025, representing roughly one‑tenth of all U.S. mortgage originations by dollar volume, according to a Griffin Funding analysis of Polygon Research’s loan‑level HMDA data. A separate measure from Optimal Blue shows the trend persisting, with non‑QM loans surpassing 10 % of monthly rate‑lock volume in July 2026.
Why the shift?
The growth follows a 2021 rule change by the Consumer Financial Protection Bureau that eliminated Appendix Q, the strict income‑documentation appendix within the Qualified Mortgage (QM) rule. While the new rule still requires lenders to verify income, it now allows the use of standards drawn from FHA, VA, USDA, Fannie Mae and Freddie Mac guides. For many self‑employed borrowers, the old Appendix Q was a barrier because lenders counted only post‑deduction income on tax returns, often understating cash flow.
About 16.5 million Americans are self‑employed, including real‑estate investors, 1099 workers, retirees and others whose income or assets do not fit neatly into traditional underwriting. These borrowers are increasingly turning to private‑market documentation programs—bank‑statement loans and debt‑service‑coverage‑ratio (DSCR) loans—that price differently from conventional financing but provide access.
Real‑world examples
Griffin Funding’s loan records illustrate the pattern. A Florida business owner who wrote off most of his income on tax returns was able to refinance his home by documenting cash deposits over 12‑24 months. In Massachusetts, a self‑employed professional qualified for a cash‑out refinance only after explaining deposits in a client‑trust account. Both borrowers had solid credit; their obstacle was paperwork, not creditworthiness.
Similarly, a Michigan medical‑practice owner purchased a rental property using a non‑QM DSCR loan, which bases qualification on the property’s rental income rather than personal earnings.
Policy background
The Self‑Employed Mortgage Access Act, introduced in 2018 by Sens. Mark Warner (D‑VA) and Mike Rounds (R‑SD), sought to replace Appendix Q with the broader underwriting standards now in place. Although the bill never passed, the CFPB’s March 2021 final rule essentially adopted its key provisions.
Since then, no new federal legislation has been introduced to further address the documentation gap. A search of Congress.gov shows no active bills, and housing‑bill trackers list none.
Market impact
Non‑QM loans now account for 10 % of U.S. originations by dollar volume. In July 2026, they comprised more than 10 % of total lock volume, up 1.4 percentage points from June and over two points from a year earlier. Bank‑statement loans made up 30.6 % of that volume, while investor and DSCR loans represented 33.5 %. The remaining 35.9 % consisted of interest‑only and other expanded‑guideline products.
Credit quality has not deteriorated; average credit scores for July locks held at 730 and debt‑to‑income ratios were lower than the prior year. The shift reflects a broader move away from the narrow confines of the QM box rather than a rise in risky borrowing.
What this means for borrowers
With Appendix Q gone, self‑employed and gig‑economy workers continue to rely on alternative documentation to secure mortgages. While pricing may differ from conventional loans, the expanded options help maintain home‑ownership opportunities for a growing segment of the American workforce.
Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.
