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For most of the last decade, the conforming loan has been the default American mortgage. These loans meet Fannie Mae and Freddie Mac guidelines. If your finances fit that mold, getting a mortgage was simple. If they didn't, you were treated as an exception.
That's changing. Optimal Blue tracks rate locks on a platform that prices and locks more than a third of U.S. mortgages. Its data show that conforming loans accounted for less than half of locked volume in April 2026. That hasn't happened since at least January 2018. They held at 47% in July and August, down from 73.1% in July 2020.
Conforming is still the largest single category, but it is no longer the majority. One of the fastest-growing alternatives is the non-QM loan. Non-QM made up more than 11% of Optimal Blue rate-lock volume in August 2026, up from around 4% in early 2024.
Why the mortgage market is changing
The shift doesn't have a single cause. Several forces are pushing in the same direction.
More people earn money in ways that don't fit a W-2. Business owners, freelancers, contractors, and gig workers often have strong cash flow. But their tax returns show income after write-offs, which can make them appear less qualified than they are. Because agency guidelines rely heavily on tax returns, many of these borrowers end up looking elsewhere.
Real estate investors want to qualify the property. Investor loans that qualify based on a rental's cash flow, known as DSCR loans, accounted for more than 35% of non-QM production in August 2026, according to Optimal Blue data.
Home prices keep pushing loans past agency limits. The 2026 baseline conforming loan limit is $832,750, and $1,249,125 in high-cost areas. Anything larger can't be a conforming loan, no matter how strong the borrower is.
Investors are funding it. Wall Street demand for non-QM loans is strong. Through Sept. 11, 2026, non-QM securitizations totaled $83 billion. That made 2026 the best year on record for the sector, according to Bank of America Securities.
Who non-QM is built for
Non-QM stands for non-qualified mortgage. The name sounds technical, and it doesn't mean a borrower is unqualified. It means the loan is underwritten outside the standard agency box, usually to document income or assets a different way. Common options include:
- Bank statement loans for self-employed borrowers who qualify based on business or personal deposits rather than tax returns.
- DSCR loans for investors who qualify on a rental property's cash flow instead of personal income.
- Asset-based loans for borrowers with substantial savings or investments but irregular income, such as retirees.
- 1099 loans for contractors and freelancers paid on a 1099.
- Jumbo and high-balance loans above the conforming limit.
If any of these sound like you, you're in good company. This is now a meaningful share of the market.
Why your lender's business model matters
As non-QM goes mainstream, more lenders are adding it. Some large lenders have expanded into the space only recently. It's worth asking how a lender actually handles these loans.
Many lenders originate a loan and sell it right away. When that happens, the buyer's rules decide what gets approved, and borrowers who don't fit get turned down.
NASB is a portfolio lender. We've been lending since 1927, and we keep many of the loans we make on our own books. That means our underwriters can look at the full picture: how your business really performs, what the property earns, and what assets you hold. A rigid checklist set by someone else doesn't make that decision. Ready to see what you qualify for? Talk to one of our loan officers today at 888-661-1983 or click here for more information.
