August 7, 2025

"Survive ’Til ’25” Has Turned Into “Tread Water ’Cause You Gotta"

A Non-QM Reality Check for Mortgage Professionals as We Head Into the Back Half of 2025

For much of the past year, the phrase “Survive ’Til ’25” echoed across the mortgage industry like a rallying cry. We were supposed to be turning the corner by now with lower rates, stronger purchase activity, and a meaningful rebound in volume.

That hasn’t happened.

Rates haven’t budged. Refis are still off the table. And the purchase market continues to be held back by stubborn affordability issues. The result? Mortgage professionals across the industry are doing what it takes to stay afloat in a stalled cycle.

The new mantra? Tread water ’cause you gotta.

But here’s the thing: in this market, staying afloat isn’t failure, it’s a win. The mortgage professionals who are gaining ground in 2025 aren’t doing it by chasing what’s not working. They’re doubling down on what is. And in this cycle, that means Non-QM.

What’s Actually Moving

Let’s start with the numbers. Securitizations of Non-QM loans are up over 30% year-over-year. Analysts expect total 2025 Non-QM origination to reach $75 to $100 billion, a sharp jump from 2024. Investor appetite is strong. Liquidity has never been better. And the performance data has reinforced confidence in the sector.

More importantly, Non-QM has evolved from a niche offering to a core lending strategy that solves problems in a market where traditional products don’t.

Alt-Income Borrowers Are the Norm; Not the Exception

More than 40% of borrowers under 45 reports using some form of non-W2 income. That’s a massive shift in borrower profile. Think entrepreneurs, side hustlers, consultants, and small business owners. These aren’t fringe borrowers. They’re creditworthy, they have assets, and they’re active in the market, but they don’t fit inside agency underwriting boxes.

Bank statement, 1099, and asset-utilization loans aren’t just alternative solutions anymore. They’re foundational. And professionals who know how to package and position these loans are winning both volume and long-term referral business.

DSCR Is a Path to Revenue

Real estate investors are another segment still active and growing. DSCR lending remains one of the most efficient ways to serve them. These loans now make up nearly 29% of Non-QM originations, driven by strong rental income trends and adjusted investor expectations. Even with higher rates, investors are transacting; they need lenders who understand deal velocity, portfolio flexibility, and cash-flow-based approvals.

Don’t Wait for the Market to Come Back — Work the Market We Have

The broader market may feel slow, but Non-QM isn’t standing still. From expanded alt-doc programs to streamlined DSCR to hybrid offerings, there are meaningful ways to generate volume and serve borrowers who have nowhere else to go.

The reality is this: we’re all treading water. But some are doing it with purpose by leveraging Non-QM to keep their pipelines moving, their referral partners engaged, and their businesses positioned for when the market does turn.

Arc Home is here for that exact moment. If you’re ready to reframe the second half of 2025, we’re ready to help.

- Brian Devlin, President/CEO

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