Kick off 2026 - Outside-the-Box Loans for Today’s Market

2026 has started off with a bang! The year-end brought us the lowest interest rates we saw all year, and many are optimistic that this trend could continue. We’re heading into the new year encouraged by improving affordability and the potential for increased sales activity.

Home values are still expected to rise, but at a more moderate pace—likely closer to 2% annually, depending on location. That kind of steady appreciation is healthier for the market and creates opportunities for both buyers and sellers.

RATES

Mortgage rates are currently hovering around 6%. As always, some scenarios command lower rates while others are higher, depending on credit profile, loan structure, and property type. Most industry experts agree that rates are not likely to move meaningfully lower in the near term—although with so many moving parts, anything is possible.

If you’re on the fence waiting for “better” rates, it may be time to get moving. Waiting hasn’t been paying off for many buyers, and opportunities often come from strategy rather than rate alone.

LOAN PROGRAMS – The Rise of Non-QM

We are absolutely seeing the rise of Non-QM loans. Non-QM simply means these loans don’t fall under the government’s “Qualified Mortgage” guidelines used for Fannie Mae, Freddie Mac, and government loans (VA and FHA).

Some of the most common Non-QM programs we’re using include:

• Bank Statement loans (business or personal, 12–24 months)
• DSCR loans (Debt Service Coverage Ratio – rental income supports the payment)
• 1099-only income loans
• Investor No-Ratio loans (rental properties only)
• Asset-based loans, either imputing income from assets or using assets to meet Ability-to-Repay requirements

There are many more options as well. Some programs are tailored specifically for self-employed borrowers, while others are available to anyone. And believe it or not, interest rates on these programs are often very comparable to traditional full-documentation loans.

CLIENT SPOTLIGHT – A REAL WIN

My clients entered escrow to purchase a single-family property they planned to use as a second home and short-term rental in a mountain resort area. Unfortunately, their original lender—who had already issued a pre-approval—backed out and declined the loan.

With a very short escrow, the holiday season underway, and storm season approaching in the mountains, timing was critical. We were able to step in, structure a solution, and close the loan in just 21 days from start to finish using a Total Asset loan based solely on the buyer’s assets.

This is a great example of why loan structure and experience matter.

I hear a lot of frustration right now about rates not dropping further. The reality is that today’s rates are very close to the 40+ year historical average. The real challenge—especially here in Southern California—is affordability and home prices, not just interest rates.

We are eternally grateful for your referrals and continued trust. If you—or someone you care about—has questions, I’m always happy to help.