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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 48 November 2025 F E A T U R E S T O R Y candidates. The opportunities are vast enough for enterprising loan officers to build trusted relationships with these borrowers before their competitors do. Consider the self-employed borrow- ers mentioned above. Often, when they apply for an agency mortgage, their tax strategies underrepresent their earnings. This prevents them either from quali- fying altogether or from borrowing as much as they want and can repay. As with primary mortgages, non-QM lend- ers use alternative formulas to calculate these individuals' incomes. For instance, they review 12-24 months of bank statements, one-year's profit and loss statements, and borrowers' 1099s. This methodology provides a full picture of their ability to handle the home equity loan or HELOC they desire. Also, consider the more than 17 mil- lion real estate investors who manage approximately 49.5 million housing units (U.S. Census). Many of these inves- tors could also be potential second-lien candidates. In competitive markets, they could have time-sensitive funding needs, from portfolio expansion to renovating in time for "back to college" rental season. Non-QM home equity products have evolved to accommodate their sense of urgency. For instance, lenders can qualify many investors based on a DSCR (debt service coverage ratio) formula that keeps the approval process streamlined. Matching the Right Non-QM Home Equity Products With the Right Borrowers T hese non-QM solutions are not "one size fits all." It's not uncom- mon for a non-QM closed-end second mortgage, for instance, to provide as much as $750,000 in cash—well beyond the smaller amounts loan officers might think about to help borrowers finance a new kitchen in a modest home. They also apply to a wide range of proper- ties—such as single-family residences, townhomes, two- to four-unit rentals, and non-warrantable condos. That increases the number of situations that could make them a helpful option for borrowers. Non-QM candidates' goals are wide in range. For example, a self-employed borrower who has begun to invest in in- come properties might want to scoop up a second rental before her competition does. A closed-end second lien would give her cash for the down payment, and she might qualify based on either her bank statements or her DSCR income. In a tight market, the DSCR option might be preferable for a quick closing. Another self-employed individual might have business growth on her mind and might benefit from the cash to pay rent on an outside office. A third entre- preneur might be putting twins through college and could anticipate a shortfall he could make up for using private student loans and some second-lien funds. The Power of Product Mastery W holesale non-QM lenders focus on helping the mortgage brokers and loan officers who represent their products to master all the nuances. That empowers them to network with con- fidence—educating their referral part- ners and an expanded base of potential non-QM home equity candidates. It's all a matter of telling under- served borrowers, "I see you," and then becoming their go-to non-QM home equity/HELOC expert. Consider the more than 17 million real estate investors who manage approximately 49.5 million housing units (U.S. Census). Many of these investors could also be potential second-lien candidates."