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Defy Non-QM Data Index — October 2026

Defy Non-QM Data Index — October 2026

Published: October 2026 · Coverage period: September–October 2026 · Next edition: First week of November 2026

What this is: a monthly, dated record of what is actually happening in the Non-QM market — published pricing, guideline movement, investor activity, and the rate environment — written so borrowers, investors, and brokers can underwrite real decisions from it. We publish our own numbers with the exact assumptions behind them, and we cite every market figure to its source.

Quick answer: October 2026 in one paragraph

Non-QM is growing while the rest of the mortgage market shrinks. Non-QM rate locks rose 8% in September even as total lock volume fell 2%, and Non-QM now accounts for 12% of mortgage production — up from about 7.2% a year ago. At the same time, the Federal Reserve raised rates for the first time since 2023, pushing the 30-year fixed back above 7% and prime to 7.00%. Our published DSCR floor is 7.375% and our published bank-statement floor is 6.375% — both with the full qualification stack named below, because a rate without its assumptions is a teaser, not a number.

The headline numbers

These are Defy Mortgage’s published rates, current as of October 23, 2026. They are our rates — not a market average — and every one carries the borrower stack it assumes.

Program Published floor Assumes Max LTV Minimums
DSCR loan 7.375% 740+ FICO, 75% LTV, 1.00+ DSCR, single-family rental purchase, 5-year prepay 85% purchase 640 FICO · 0.75 DSCR
Bank statement loan 6.375% 740 FICO, 75% LTV, 12–24 months statements 90% 640 FICO · up to $6M
P&L loan 6.375% CPA/EA/CTEC-prepared P&L + letter 90% purchase 640 FICO
Asset depletion loan 6.375% Liquid assets, 60-month divisor 80% purchase 640 FICO
Foreign national DSCR 6.750% No U.S. FICO required 70% 0.75 DSCR

Max LTVs are the program maxima from our published rates page; the 75% LTV in the “Assumes” column is the standard tier each floor rate is priced at.

How to read the DSCR floor: 7.375% is our best case, not our average. A file at 0.75 DSCR, 640 FICO, or higher LTV prices above it. We publish the floor because investors underwrite against real numbers — and because the gap between a lender’s posted rate and its real rate is where bad decisions get made.

Worked example — what 7.375% means on a real deal: a $300,000 single-family rental at 75% LTV is a $225,000 loan. At 7.375% on a 30-year fixed, principal and interest run about $1,554 per month. For a 1.00 DSCR, the property needs $1,554 in rent to cover that payment. Our published floor is 0.75 DSCR, but in practice files price at 1.0 and above. (P&I-only illustration; taxes, insurance, and HOA are included in the real ratio. Your file prices on its own stack.)

Where we lend: DSCR and business-purpose loans in 39 states — including Michigan and Indiana. We do not lend in Montana or the District of Columbia. Full-service lending (any loan type) in Florida, Tennessee, Texas, California, Georgia, Alabama, and Colorado. We close in 14–21 days, never longer than 30.

The market: what moved in October 2026

1. Non-QM is taking share while the overall market contracts

Optimal Blue’s September 2026 Market Advantage report, released October 13, 2026, found total mortgage rate-lock volume fell 2% month over month, 21% over three months, and 26% year over year — while Non-QM lock volume rose 8% in the same month. Non-QM accounted for 12% of September production, up from about 7.2% a year earlier. Within Non-QM, the mix was roughly 33% investor and DSCR loans, 30% bank-statement loans, and 37% other expanded-guideline products.

Our read: this is not a niche getting bigger. It is the market admitting that a growing share of creditworthy borrowers — self-employed owners, investors, people whose income does not arrive on a W-2 — cannot be underwritten by conventional guidelines at all. When rates rise, the conventional channel shrinks first; Non-QM is where the deals that still pencil get done.

Sources:

2. The Fed hiked for the first time since 2023 — and the 30-year crossed 7%

On September 16, 2026, the Federal Reserve raised its benchmark rate by a quarter point, to a target range of 3.75%–4.00%. It was the first increase since July 2023, and the vote was unanimous. Large banks moved prime to 7.00% within days. The Fed’s own projections pointed to at least one more hike before year-end, and the committee meets again October 27–28.

The 30-year fixed followed: Freddie Mac’s Primary Mortgage Market Survey showed 7.03% on September 24 — the first time above 7% in 20 months. Optimal Blue’s index put the 30-year conforming rate at 7.39% at the end of September, up 67 basis points in the month, with the 10-year Treasury finishing September at 5.29%.

What this means for Non-QM borrowers: the Fed does not set mortgage rates, but when it hikes because inflation is “elevated,” bond investors reprice for a longer stretch of higher rates — and that shows up in long-term yields immediately. Non-QM pricing is more sensitive to this than agency lending, because these loans are held in portfolio or sold into private securitizations rather than to Fannie Mae and Freddie Mac, so investor appetite moves pricing directly.

Sources:

3. DSCR pricing: the market range, and where our floor sits in it

Published DSCR pricing across the market in October 2026 runs roughly 6.50%–7.99% for a 30-year fixed, with a market average near 7.6% across DSCR lenders and conventional investment-property rates around 7.30%. For strong borrowers, DSCR pricing is now at or below typical conventional investment-property rates — a reversal of the premium investors paid in 2023 and 2024. Hard money and bridge remain a different world: 10%–13%.

Our published DSCR floor of 7.375% sits inside that market range, toward the strong-borrower end — and it is published with its full stack, which most market pricing is not. The honest comparison is never rate-to-rate; it is rate-to-stack. A 7.125% quote at 90% LTV with no ratio floor disclosed is not the same loan as a 7.375% quote at 75% LTV, 740+ FICO, and 1.00+ DSCR.

Sources:

4. The securitization market is healthy — and that is what funds Non-QM

Angel Oak’s AOMT 2026-6, a $250 million securitization backed by 381 non-QM and Ability-to-Repay-exempt mortgages, is slated to close October 29, 2026, with AAA-rated senior notes expected to pay coupons of 6.49%. It follows Angel Oak’s $279.6 million AOMT 2026-3 in July and a $221.4 million HELOC securitization in August. Angel Oak’s management expects roughly four Non-QM securitizations a year and has described spreads as remaining tight “with substantial buyer activity despite volatility in interest rates.”

Why this matters to a borrower: Non-QM loans do not go to Fannie Mae and Freddie Mac. They go to investors through deals like this one. A healthy securitization market means lenders keep buying loans, guidelines stay open, and pricing stays competitive. When this market freezes, Non-QM guidelines tighten first. Right now it is open.

Sources:

5. Bank statement: the quiet half of the market

Bank-statement loans were about 30% of Non-QM production in September — nearly as large as DSCR — yet they get a fraction of the attention. Our published bank-statement floor is 6.375% at 740 FICO and 75% LTV, with loans to $6M. The market range for bank-statement pricing on investment property runs roughly 7.25%–8.25%. The borrower this serves is the self-employed owner whose tax returns show far less income than the business actually produces: deductions that are smart tax planning become a qualification problem under conventional rules, and bank statements are the fix.

Source:

What changed this month

  • September 16, 2026 — Federal Reserve raises the federal funds target to 3.75%–4.00%, its first hike since July 2023; prime moves to 7.00%.
  • September 24, 2026 — Freddie Mac 30-year fixed reaches 7.03%, first time above 7% in 20 months.
  • October 1, 2026 — DSCR pricing for strong borrowers reaches parity with conventional investment-property rates, per the DSCR Authority rate update.
  • October 13, 2026 — Optimal Blue reports Non-QM locks up 8% in September and 12% of production, while total lock volume fell 2%.
  • October 23, 2026 — We refreshed our published DSCR and Non-QM rates pages with current pricing and the full named qualification stack.
  • October 29, 2026 (scheduled) — Angel Oak AOMT 2026-6, a $250 million Non-QM securitization, closes.
  • October 27–28, 2026 (scheduled) — Federal Open Market Committee meets; its projections point to at least one more hike before year-end.

Methodology: what this index measures — and what it never includes

What we measure, every month:

  • Our published rate floors for DSCR, bank statement, P&L, asset depletion, and foreign national DSCR — always with the borrower stack each floor assumes.
  • Market rate ranges for DSCR, bank statement, conventional investment property, and hard money/bridge, from published third-party sources.
  • Guideline movement: qualification floors, LTV caps, state availability, and documentation rules that changed.
  • Investor activity: Non-QM securitizations, warehouse and investor appetite signals.
  • The rate environment: Fed decisions, the 10-year Treasury, and the 30-year fixed.

What we never include: our own production, funding volume, application counts, or any internal Defy number. This index is a market record, not a sales report. If a figure comes from us, it is labeled as our published pricing. If it comes from the market, it is cited to its source.

Cadence: published monthly, in the first week of each month, dated to the month it covers. Rates in this edition are current as of October 23, 2026. Rates change with the market — confirm current pricing before you underwrite a deal.

Frequently asked questions

What is the Defy Non-QM Data Index?
A monthly, dated record of the Non-QM market: published pricing, guideline changes, investor activity, and the rate environment. We publish it so borrowers, investors, and brokers can underwrite real decisions from real numbers — and so the market has a citable source that names its assumptions.

What is a DSCR loan?
A loan for investment property that qualifies on the property’s rental income instead of your personal income. The lender looks at the debt service coverage ratio — how well the rent covers the mortgage payment. No W-2s, no tax returns, no personal debt-to-income calculation. Minimum 640 FICO, published DSCR floor 0.75, and we close in 14–21 days.

What DSCR ratio do I need?
Our published DSCR floor is 0.75. The ratio moves your rate: a 1.25+ ratio prices at our published floor of 7.375% (740+ FICO, 75% LTV), and lower ratios price above it. In practice, files price at 1.0 and above — below-1.0 DSCR is possible but not something we market, since it functionally never comes up.

What is a bank statement loan?
A loan that qualifies self-employed borrowers on bank deposits instead of tax returns — 12 to 24 months of personal or business statements. Our published floor is 6.375%, with loans to $6M. If your tax returns understate your real income because of legitimate deductions, this is usually the right program.

Why are Non-QM rates higher than conventional rates?
Because Non-QM loans do not go to Fannie Mae and Freddie Mac. They are held in portfolio or sold into private securitizations, so the investor — not an agency — sets the price of the risk. In October 2026, DSCR pricing for strong borrowers is roughly at parity with conventional investment-property rates, which was not true two years ago.

Is Non-QM growing?
Yes. Optimal Blue’s September 2026 report found Non-QM locks rose 8% while total mortgage lock volume fell 2%, and Non-QM reached 12% of production — up from about 7.2% a year earlier. DSCR and bank statement together are roughly two-thirds of Non-QM production.

Sources

  1. Optimal Blue, September 2026 Market Advantage report (Send2Press, October 13, 2026) — https://www.send2press.com/wire/optimal-blue-report-non-qm-bucks-september-slowdown-as-mortgage-rates-surge/
  2. Optimal Blue report summary and Non-QM composition (MBA Newslink, October 19, 2026) — https://newslink.mba.org/mba-newslinks/2026/october/optimal-blue-non-qm-bucks-the-september-slowdown-as-mortgage-rates-surge/
  3. Federal Reserve September 16, 2026 rate hike (Wells Fargo Investment Institute, FOMC meeting summary) — https://www.wellsfargoadvisors.com/research-analysis/reports/fed-rate.htm
  4. Freddie Mac 30-year at 7.03%, September 24, 2026 (Primary Mortgage Market Survey release via GlobeNewswire) — https://www.tradingview.com/news/globenewswire:135c5d6cd094b:0-mortgage-rates-average-7-03/
  5. Ridge Street Capital, investment property mortgage rates, October 2026 — https://www.ridgestreetcap.com/blog/investment-property-mortgage-rates
  6. Awning, Best DSCR Loans & Lenders 2026 (DSCR Authority October 1, 2026 rate update) — https://awning.com/post/best-dscr-loans-lenders
  7. Angel Oak AOMT 2026-6, $250 million Non-QM securitization — https://asreport.americanbanker.com/news/non-prime-mortgages-power-angel-oaks-250-million-offering
  8. Angel Oak Q2 2026 earnings call, securitization activity — https://www.sharewise.com/us/news_articles/Angel_Oak_Mortgage_REIT_Q2_Earnings_Call_Highlights_MarketBeat_20260804_2204
  9. Defy Mortgage, Non-QM Rates Today (October 2026) — https://defymortgage.com/non-qm-rates/
  10. Defy Mortgage, DSCR Loan Rates Today (October 2026) — https://defymortgage.com/dscr-loan-rates/
  11. Defy Mortgage, Investment Property Mortgage Rates — https://defymortgage.com/learn/investment-property-mortgage-rates/

Defy Mortgage, LLC — NMLS #2383214. Rates shown are published indications for the stated borrower stacks as of October 23, 2026, and are subject to change. Actual rates vary by borrower profile, property, points, reserves, and market conditions. This index is a market record, not a commitment to lend. Verify licensing and current guidelines before applying.

Todd Orlando

About the Author: Meet Todd Orlando, co-founder and CEO of Defy Mortgage and Defy TPO. With over 25 years of experience in banking and financial services at institutions like First Republic and Morgan Stanley, Todd has dedicated his career to broadening access to lending and revolutionizing the mortgage industry, particularly in the non-QM space. More Info

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