The 25 Housing Markets With the Most Non-QM Loans

There’s a lot in a name, but don’t let this one fool you.

Non-qualified mortgages (non-QM) aren’t as negative as the moniker implies, nor are they the subprime loans that drove the housing crash. This class of mortgages is for creditworthy borrowers, just non-traditional ones who might not check every box required for a conventional home loan.

In the wake of the 2008 financial crisis, the Consumer Financial Protection Bureau (CFPB) created lending rules to make mortgages less risky and ensure borrowers demonstrated the “ability to repay.” These measures are still used today, and borrowers who fall outside of them (usually those with alternative income who don’t have W-2s to verify) can potentially obtain homeownership through a non-QM loan.

U.S. lenders originated over 300k owner-occupied purchase loans for non-QM borrowers in 2025, according to the latest Home Mortgage Disclosure Act (HMDA) data analyzed through Polygon Research's HMDAVision. That grew 9.37% annually, compared to just 1.17% growth for purchase mortgages overall.

As the cost of living continues to climb and outpace wage growth, shifts in the job market could lead to increasing non-QM financing in the coming years.

“Whether it’s gig economy or traditional self-employed businesses…that’s where non-QM really comes in handy,” Mike Pearson, senior vice president at AD Mortgage, said on a recent episode of the Mortgage Research Network Podcast. “We do find that the industry is growing because [borrowers] can qualify for more loan than with traditional financing.”

The non-QM division of home financing had a median loan amount of $255,000; a median property value of $335,000; and a median borrower income of $100,000. Those all stood lower than the overall purchase market’s respective figures of $315,000, $385,000, and $112,000.

The metropolitan statistical areas (MSAs) with the largest non-QM loan volume are some of the most populous, high-demand, and expensive in the country.

Top 25 Metropolitan Areas for Non-Qualified Mortgages in 2025

To find the top metropolitan statistical areas for non-QM borrowers, Mortgage Research Network analyzed the most recent HMDA data. In 2025, a total of 1,504 lenders originated 311,288 non-QM owner-occupied, 1-4 unit purchase mortgages.

Of the 311,288 originations, an aggregate of 49,549 (15.92%) came from outside defined MSAs. Meanwhile, a single market has held the crown for non-QM loans every year since at least 2020. In first place, the Dallas metro area garnered 7,497 originations and a 2.41% share of the non-QM market. New York (7,334; 2.36%) finished second for the second straight year, Atlanta (7,149; 2.3%) leapfrogged Houston (7,134; 2.29%), and Chicago (6,849; 2.2%) maintained its fifth-place spot.

The top five MSAs accounted for 11.55% of the segment’s originations. That rises to 19.6% for the top 10 and 34.2% for the top 25.

Why Do Homebuyers Use Non-QM?

Although the name may imply otherwise, non-QM loans don't equate to subprime lending, and their borrowers generally have sound credit profiles. Those profiles just might not meet the traditional checklist needed to get a conventional loan. So, the difference between QM and non-QM is more a definition than defamation of the borrower’s quality.

People who get non-QM loans tend to fall into two groups: self-employed borrowers and real estate investors. Then, non-QM typically splits into five lending products: bank statement loans, asset-based loans, debt service coverage ratio (DSCR) loans, foreign national loans, and interest-only mortgages.

Of the five, bank statement and asset-based loans are best suited for prospective buyers with atypical income, since they work with your documentation to help make you a homeowner.

Self-employed borrowers can qualify for a bank statement loan using 1-2 years of personal or business bank statements instead of tax returns. The lender then calculates your income by averaging out your bank deposits over that time.

Asset-based loans are better for borrowers with inconsistent income and significant liquid assets. Typical borrowers include retirees reaping their investment portfolios or anyone who recently sold off their business for a sizable profit. The lender calculates your income based on your total qualifying assets divided by the loan’s total months.

“There’s a lot of flexibility for a self-employed borrower. There’s a lot of income that can be used,” Pearson said. “We look at the cash flow of the business, supported by bank statements, and can see the real money coming into the company and account for that. If that same borrower is using tax returns, the write-offs that we can do through the IRS for marketing or depreciation, etc., are excluded from the qualifying income on the QM side."

"I’d like to see Fannie and Freddie, FHA, and VA account for that. I think it’s a little antiquated how we view tax returns at this point. Especially as the [non-QM] segment and self-employed borrowers grow,” Pearson went on to add.

Find the Right Non-QM Lender for You

Don’t fit neatly inside the conventional mortgage parameters? You can always take the time to raise your credit profile or apply for financial assistance — and both are prudent actions to take.

But a non-QM loan could help you become a homeowner even if you don’t meet all the traditional requirements. Finding a lender that works in the space can be especially beneficial since they have more familiarity with the underwriting rules.

If a non-QM loan sounds right for you and you’re ready to apply, reach out to a local lender to begin the process.

All figures based on Home Mortgage Disclosure Act (HMDA) data provided by the Consumer Financial Protection Bureau (CFPB) and accessed August 18, 2026, through PolygonResearch.com HMDAVision.