Increasing Borrower Stickiness Through The $400 Billion To $500 Billion Non-Agency Market

“I didn’t know that you offer mortgages for self-employed people.”

“I didn’t know that you could help me pay down my credit card debt.”

“I didn’t know that you could enable me to finance a fix and flip.”

When mortgage brokers and loan officers (LOs) prioritize borrower retention, they’re less likely to hear statements like that. That’s because they do two things right:

• They continually diversify their product lines
• They regularly check in with every borrower, alerting them to these offerings. This is especially important in today’s competitive market, where servicers can recapture borrowers who never hear from their original originators

Today, many originators are also achieving an edge by emphasizing products from the non-agency sector, a broad term that encompasses loans that aren’t backed by government sponsored entities (GSEs) like Fannie Mae or Freddie Mac. The size of this market makes it especially noteworthy. Mortgage leaders believe non-agency loan originations could reach $400 billion to $500 billion this year, including $150 billion to $160 billion from closed-end second (CES) mortgages and HELOCs, $150 billion to $180 billion from non-QM originations, and $30 billion to $35 billion from residential transition loans (RTL).

How can LOs capitalize on these offerings? Read on.

Provide Borrowers with Additional Liquidity

Whether borrowers want to invest in their own businesses, pay for an adult child’s wedding, consolidate their debt, or make a down payment on an investment property, a home equity loan or HELOC is becoming a popular way for them to access extra cash. U.S. homeowners have $11.5 trillion in tappable equity, according to ICE, and they are leveraging it in droves—partly to consolidate their high levels of debt.

Americans have more than $1.2 trillion in credit card debt, over $1.6 trillion in auto loans, and another $1.6+ trillion in student loans. They’re using their second liens to bring this debt down.

America’s aging housing stock is also driving demand for second lien products. Most U.S. homes today are between 40 and 50 years old. Their owners aren’t moving; in fact, in January 2026, existing home sales decreased 8.4%. But these homeowners still need cash for a new roof, kitchen and bathroom updates, or an addition so they can age in place. They’re relying on CES mortgage and HELOC products to provide it.

Finally, borrowers are using equity solutions to purchase new income properties, such as single-family rentals. In the past, they might have depended on a cashout refinance for additional liquidity instead of a CES mortgage or HELOC. Now, 85% of U.S. homeowners have mortgage rates that are below 5%, which they would forfeit with a cashout refi. Instead, by taking out a smaller second lien with today’s rates, they’re preserving their lower rates on their primary mortgages while expanding their portfolios.

Meet the Needs of the Self-Employed

The picture of the “typical” homebuyer has changed with the growth of the gig economy, freelancing, and entrepreneurship. There are 15 million self-employed Americans. Many of them can’t qualify for a government-backed mortgage using tax-return documents like W-2s.

Originators are expanding their revenues by catering to underserved borrowers like them. Non-QM products such as bank statement loans qualify these individuals using alternative documentation, such as 12-24 months of personal and business bank statements, 1099 forms, and one year’s profit & loss (P&L) statements. This detailed information can provide a more complete picture of their ability to pay than more traditional documentation, with some surprising benefits. For example, some self-employed borrowers’ tax strategies underrepresent their qualifications. As a result, they find that they can buy a larger home, that they are well-qualified to purchase, than they expected with a non-QM bank statement loan.

Target Investors

It’s challenging for mortgage brokers and LOs to grow without a dedicated focus on property investors. During the first 10 months of 2025, investors accounted for close to one third of U.S. home purchases, motivated by strong demand for rentals, as first-time homebuyers continued to delay their purchases due to high valuations. According to the National Association of REALTORS®’ 2025 Profile of Home Buyers and Sellers, the typical age of buyers was 40 for transactions occurring between July 2024 and June 2025.

Non-QM debt service coverage ratio (DSCR) loans meet many investors’ needs, whether they are purchasing single-family rentals, planned unit developments (PUD), condos, including non-warrantable properties, 2-4-unit rentals, or townhomes. Lenders qualify them for a DSCR mortgage based on their property’s cashflow, which condenses the approval cycle and enables them to act quickly in competitive markets. These DSCR loans are also particularly helpful to:

• Business-purpose investors who are financing a purchase through their limited liability companies (LLCs).
• Real estate investors with more than 10 income properties, the maximum that they can finance through a government-backed mortgage

Accelerate Builders’ Progress

Many regional builders, investor developers, and other real estate investors are trying to scale up their initiatives to ease the housing shortfall. Many of them are in a position to add up to 100 homes to the market per year with the right financing. Enterprising originators are supporting them with residential transition loans (RTL)—which are designed for business-purpose investors seeking to purchase, build, improve, resell or rent out properties.

These flexible short-term loans help finance ground-up construction and fix and flips. They are also used for bridge loans when investors want to buy a new property before closing the sale of an existing one.

The terms and draw schedules for specialized RTLs align with specific milestones, timelines and project plans and meet the unique needs of builders and developers subject to weather, contractor and supply chain issues. LOs who master their nuances stand to gain a foothold in a market that many of their competitors have not entered … at least not yet.

Impress with Multiple Alternatives

Diversifying into the non-agency space is giving originators another advantage. Often, a seemingly complex problem can be solved by multiple loan products and make the originators who offer them look like heroes.

For example, a residential transition loan, DSCR loan, or CES mortgage could all be solutions for a particular investor in fix and flip projects, depending on project timetables, the size of the desired loan, and how quickly it needs to be paid back, which is particularly relevant for short-term RTLs.

A self-employed borrower who needs cash for a down payment on a second income property might benefit from a DSCR loan, or a closed end second mortgage underwritten based on her bank statements or DSCR income. Non-agency/non-QM lenders can help originators offer loans with various terms, features and options based on different customer scenarios.

Stay Front and Center

Most important, successful originators never take a borrower for granted. They’re deliberate and systematic in their approach, segmenting their databases to prioritize outreach based on meaningful indicators of demand. They also consistently educate referral partners on the problems they solve for borrowers, whether during networking group “informercials,” Realtor or builder webinars, or jointly developed e-newsletters for potential customers.

These strategies help eliminate “I didn’t know” statements, build LOs’ book of business, fend off competitors, and strengthen relationships even when borrowers are not ready to buy or sell.