The case for Non-QM: Serving the new American workforce

I’d like to tell you about someone who did everything right.

She built a wedding photography business from the ground up. What started as a side hustle became a full-time operation, then a team, then something that could support not just her, but her entire family. Her income wasn’t inconsistent, but it was complex, with seasonal flow creating a strong, upward trend. She paid her bills. She saved. She reinvested in her company the way her financial advisor recommended.

On paper, she was exactly the kind of person the mortgage industry says we want to serve: responsible, capable and financially disciplined. But when she sat down to apply for a mortgage, none of that seemed to matter. The system didn’t know how to see her.

Telling a borrower like her that she doesn’t qualify because her financial life doesn’t fit inside a typical credit box is more than a transactional failure. It’s a signal that the system has a gap. And the mortgage companies that make it? They’re going to be the ones who bridge that gap.

A system designed for one kind of earner

The Qualified Mortgage (QM) framework was built around the dominant assumptions of the time. It serves a specific kind of financial life: salaried, with an annual W-2 and solid predictability. And those borrowers still exist. But they are no longer the only story, or even the dominant one, in many communities.

Today’s fastest-growing segment of the workforce includes 1099 earners, gig workers, freelancers and independent contractors. In fact, according to Make My Paystub, an estimated 70.4 million Americans are freelancing (about 36% of the workforce), with projections that it could reach 50% by 2027. Many are from immigrant backgrounds. Many are Black or Latino entrepreneurs building businesses. And some are building entirely new kinds of businesses powered by AI. 

Hence, the gap. Those atypical borrowers are often the ones for whom homeownership would be most transformative. When access breaks down at the point of underwriting, it doesn’t just delay a purchase. It puts a hurdle in the way of using homeownership as a way to build generational wealth.

Consider the self-employed business owner. Often first- or second-generation, building something from nothing. The write-offs that reflect smart business decisions — reinvestment, growth, long-term planning — are interpreted as reduced income. Standard underwriting reads the very behaviors that create durable wealth as instability.

That disconnect isn’t malice. The system doesn’t want to prevent success. But it nonetheless needs a push.

What the industry loses when it doesn’t solve this

It’s easy to frame this as a missed deal. Just a borrower we couldn’t place, or a file that didn’t work. But the cost is higher than that.

Homeownership remains one of the most reliable drivers of wealth creation in this country. When we fail to serve borrowers whose financial lives fall outside traditional frameworks, we’re not just losing volume, we’re functioning as gatekeepers and narrowing who gets to kickstart that wealth-building engine.

Which means we’re not only missing out on helping people, we’re missing out on profit.

The communities driving small business formation, entrepreneurial activity and nontraditional income growth are not on the margins of the economy. They are increasingly at its center. The originator who cannot serve self-employed or non-traditionally documented borrowers isn’t just opting out of a niche. They’re stepping away from where opportunity is actively expanding.

Another thing to keep in mind is the relational cost. Many of these borrower communities are deeply networked. Which means word of mouth travels through families, churches and associations. When someone finds an originator who understands their financial life — and can translate it into a successful outcome — they don’t keep that to themselves.

And if you drop the ball? That gets around, too.

The infrastructure to serve these borrowers is no longer theoretical. The Non-QM market has matured. Execution is more consistent, and product offerings are more refined. The question is no longer whether these borrowers can be served at scale. It’s whether we are prepared to meet them there.

What better lending actually looks like

Serving this segment of the market requires more than access to products. It requires both financial and educational fluency.

Obviously, income analysis is part of it. 

• The ability to read a Schedule C and understand what it actually represents
• Comfort with interpreting a K-1 beyond the surface once-over
• Structuring an asset depletion loan in a way that reflects reality, not just ratios

These aren’t just technical skills. They’re the tools that enable an originator to say yes when a borrower with a complex file deserves that answer. But technical skill alone isn’t enough. Respectful, educational communication matters just as much.

For many borrowers, Non-QM is unfamiliar territory. And if it’s presented as a consolation prize for people who “don’t quite qualify,” it reinforces the very exclusion we’re trying to solve. But when it’s explained clearly, in plain language, as a product designed to reflect the way they actually earn and manage money, the experience changes, becoming recognition rather than rejection.

The originators who do this well combine product sophistication with something less talked about but equally important: the ability to see the full person behind the file. To understand not just how someone earns, but how they think about money, risk and stability. To communicate in a way that is respectful, culturally aware and grounded in clarity rather than assumption.

The system can do better. So can we.

We have products that can responsibly and effectively serve borrowers whose financial lives don’t fit conventional molds. We have a secondary market that has evolved to support them. In many cases, we have the data and experience to underwrite these loans with discipline and confidence. What we are still building is the will and fluency to use them well.

Non-QM is not a last resort. For many borrowers, it is the first time the lending process has fully accounted for how they actually earn, save, and build. Increasingly, it’s a recognition that the workforce has changed, and that our approach can change with it. 

Yes, QM can reach more borrowers and close more loans. And we are in the business of business. But it can also be a part of the next chapter of the American workforce. After all, wedding photographers need a place to live, too.

Tai Christensen is the Founder of Origin & Oak Creative.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].