About a month ago, our CRO Bill Mitchell attended the IMB conference in Amelia Island. One session he attended focused on the state of the Non-QM market and the numbers were impressive.

In 2025, Non-QM originations approached $400 billion, with expectations for continued growth in 2026 and beyond. That’s no longer a niche product offering. That’s a structural shift in mortgage lending that is here to stay, and may become more of the norm. So why has Non-QM grown so dramatically and what automations does it need to support this continued growth?

What Is a Non-QM Loan?

A Non-Qualified Mortgage (Non-QM) loan in its simplest definition doesn’t meet the strict parameters of the post “great recession” Qualified Mortgage (QM) rule. But that definition misses the point. Non-QM exists because borrower income and financial profiles have changed.

Because of the world events of the last 20 years, many, and a growing number of today’s borrowers are:

• Self-employed

• 1099 earners

• Gig workers

• Real estate investors

• Asset-based borrowers

• Credit-recovering but financially stable

The Great Recession reshaped employment. COVID accelerated remote and flexible work. Institutional investors tightened housing supply. Home prices climbed. Borrower needs evolved. Traditional underwriting has not yet caught up to all these changes. 

Non-QM stepped in to fill the gap. Flexibility became its defining feature. Some estimates suggest up to 50% of Non-QM loans include guideline exceptions. That statistic alone tells you this market operates differently than agency lending.

The Automation Gap

Agency lending benefits from centralized decisioning through automated underwriting systems (AUS) like DU and LPA. Non-QM currently does not. Instead, Non-QM lending involves:

• Distinct investor guidelines

• Product overlays

• Relationship-based exceptions

• Unique risk appetites

• Rapid product iteration

Many larger Non-QM lenders even grant product-level exceptions to specific brokers. Try fitting that into a traditional AUS model. Today, most Non-QM loans are manually underwritten. Then, before securitization, investors hire third-party review (TPR) firms to manually re-underwrite the loan to confirm eligibility and demonstrate compliance for the secondary market.

That means:

1. Lender underwriting

2. TPR re-underwriting

3. Investor validation

Multiple reviews. Multiple interpretations. Multiple operational touchpoints. Not because the industry lacks discipline, but because it lacks standardized decisioning infrastructure.

Why Non-QM Hasn’t Had Its “DU Moment” Yet

Agency lending works because risk is centralized. Non-QM works because risk is differentiated. Every lender defines credit risk slightly differently. Every investor structures products differently. Flexibility is the feature by design and not a flaw to be corrected. But at $400B+ in annual originations, manual underwriting does not scale efficiently.

Non-QM lenders are searching for:

• Consistency in mortgage underwriting

• Faster turn times

• Reduced operational friction

• Clear audit trails

• Secondary market confidence

• Better risk management controls

They need an AUS. But not the agency version.

What a Non-QM AUS Must Be

A Non-QM automated underwriting system must:

• Allow lenders to control and update their product guidelines internally

• Manage individual exceptions dynamically

• Support new product launches quickly

• Reflect distinct risk appetites

• Provide auditability across the loan lifecycle

It cannot require vendor development cycles for every rule change. It must move at the speed of the market. And it must follow the loan from:

• Point of sale

• Through underwriting

• Into third-party review

• Through securitization

The decisioning engine must remain consistent and available across the entire supply chain.

The Paradox

Non-QM thrives on flexibility. But scale demands standardization. The next evolution in mortgage technology won’t eliminate human judgment. It will structure it.

It will allow lenders to encode their credit philosophy, apply it consistently, adjust it quickly, and demonstrate defensibility to investors and regulators, while making that decisioning framework available across the entire supply chain. That would be Non-QM’s DU moment. And when that level of automation exists, a bigger question emerges: could Non-QM originations rival, or even surpass, conventional volumes?

If technology can match the diversity of today’s borrower income profiles with the speed and certainty the market demands, the future of mortgage lending looks far more expansive than many imagine.

Michael “Mike” Lewis is a growth-oriented executive and intrapreneur with more than 28 years of leadership experience across SaaS, Mortgage Technology, Fintech, and Financial Services. Throughout his career, he has built and scaled technology platforms, led operational transformations, and developed high-performing teams.

As President of LoanPASS, Mike leads product strategy, innovation, and go-to-market execution for a modern pricing and decisioning platform that enables lenders to replace legacy systems with configurable, automated infrastructure. Under his leadership, the company has grown revenue 4.5x from 2023 to 2025 and launched multiple enterprise SaaS products serving a rapidly expanding national client base.

Before leading LoanPASS, Mike spent decades working within banks, lenders, consultancies, nonprofits, and enterprise software firms, driving systems consolidation, operational scale, and cultural alignment. His career reflects a consistent belief that meaningful innovation does not require starting from scratch, it requires ownership, initiative, and disciplined execution from within.

Mike is passionate about mentoring diverse teams and helping professionals develop the skills and mindset that make intrapreneurship as rewarding and impactful as entrepreneurship. Through writing, speaking, and coaching, he encourages others to cultivate strategic thinking, initiative, and innovation; skills that empower individuals to make meaningful contributions, advance their careers, and, if they choose, pursue entrepreneurial ventures with confidence.

He holds a Bachelor of Science from Brigham Young University and an MBA in E-Business from the University of Phoenix.