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Today's investor property loan opportunity for lenders
Foreign buyers and local investors continue to play a critical role in the U.S. housing market, pushing ahead with purchases and refinances despite rising costs, shifting politics, and slower returns. For mortgage lenders, these buyers represent a growing business opportunity.Investor ownership of residential real estate has long been a contentious topic, with some blaming investors, particularly corporate buyers, for inventory shortages. But, as Yuval Golan, CEO of real estate financier Waltz, and others note, the majority of properties are actually owned by so-called mom-and-pop investors.Jessica Bluj, president of the mortgage division at American Pride Bank, said these smaller investors are taking advantage of lower demand to enter the market. "What we're seeing is that people who probably 10 years ago would never have considered buying investment properties are now doing so," she said. "These products are becoming more available, giving regular homeowners the ability to invest in additional properties."Investor sentiment and market trendsDespite conventional wisdom suggesting foreign investors might shy away amid tariffs and political uncertainty, lenders report continued interest.Golan said international investors often view real estate as a safe, inflation-resistant investment (as they have been for quite some time). "Whenever my parents had savings, they would buy bricks and mortar rather than luxury goods," he noted.However, investors of all types are cautious. The Fall 2025 RCN Capital/CJ Patrick Company Investor Sentiment Index dipped slightly to 101 from 102 in Q2 and fell 23 points from the prior year."Market conditions for real estate investors continue to prove challenging, with high financing rates, rising labor and materials costs, and soaring insurance premiums affecting profit margins," said RCN Capital CEO Jeffrey Tesch. These pressures also weaken affordability for homebuyers, limiting fix-and-flip opportunities.Canadian buyers have been more cautious, partly due to tariffs and currency fluctuations, but they still represent a notable share of foreign activity. In 2024, Canadians accounted for 13% of foreign buyers, purchasing $5.9 billion in U.S. real estate. In the first half of 2025, 20% of Waltz's foreign clients were Canadian, second only to Israelis at 36%.Investor strategies are also shifting. While a third of investors stick to their primary model, flipping, renting, or wholesaling, 55% have switched their primary approach in recent years, and 11% added secondary strategies. Flippers have been more likely to switch to rental investing, while some rental investors have expanded into other models.Ben Fertig, president of Constructive Capital, noted that investor asset classes remain "countercyclical" and are likely to perform well over the long term. The ISI score above 100 for six of the last 10 quarters indicates a generally positive investor outlook.Why lenders should focus on investorsFertig explained that lenders can benefit from offering products tailored to investors, particularly given challenges in the traditional owner-occupied market. "Investor products, both DSCR rental loans and residential transitional loans, have proven less rate-sensitive than conventional first mortgages," he said.Single-family rentals have grown as homeownership rates declined since the Great Financial Crisis. Offering these products can also help lenders attract and retain borrowers, who are often repeat customers, reducing acquisition costs."If they were pulling out, why are 70% of my borrowers refinancing and buying again?" Golan said "They're not taking their money out. This is a year that we've seen 30% or 40% growth of foreign nationals reinvesting in the U.S."Rather than leaving because of tariff wars, they are investing in U.S. real estate because those have made home construction more expensive, Golan said.For foreign buyers looking to get into the market, there are opportunities to provide white-glove services to ease the process. Waltz, for example, sets up international investors for business in the U.S., including with a bank account; the company is also a direct lender, Golan said. While its expertise is with working with foreign national borrowers, Waltz also has U.S.-based clients as well. Waltz does not make loans on fix-and-flip properties, but only to owners who are looking to own for the long term."The whole idea is to reduce the amount of paperwork an investor deals with when investing, with all aspects" of the process, he noted. DSCR loans expand opportunities for mom-and-pop investorsNon-qualified mortgage debt service coverage ratio (DSCR) loans have helped smaller investors enter the market. Bluj said, "First-time investors are using these products to buy properties and build generational wealth." American Pride primarily originates these loans for purchases, not refinances, and plans to introduce a DSCR one-time close construction product to support build-to-rent housing.While DSCR and other investor-focused products are available to foreign buyers, this is not a major part of American Pride's business. The focus is on providing a diverse suite of products to meet the needs of brokers and their clients.New automated valuation model to look at DSCR mortgagesAngel Oak Mortgage Solutions, a third party originator of non-qualified mortgages (another Angel Oak unit does retail), has created a rental automated valuation model in conjunction with Clear Capital.Typically someone has to estimate what the rental income will be on the property during underwriting, but once an appraisal is ordered, a different number from what was originally calculated comes back, changing the parameters of the loan, explained Tom Hutchens, president of Angel Oak Mortgage Solutions.In looking at the rental AVM available from Clear Capital, it did an analysis comparing what it was getting from an appraiser and the differences were very minimal, Hutchens said. But it is data that is available earlier in the process."We know what the loan is going to look like weeks and weeks before it's going to close," he said.It's a tool that could ease the path for newcomers to this part of real estate lending."The people that are experienced in originating these investor loans, they understand the pain that it causes, but, but the new people that are getting into it, they're not going to ever have to experience that pain," Hutchens said. "There is no doubt this is the No. 1 pain point in originating a DSCR loan."Refinance is a big part of the investor lending segment. These property owners want to minimize their investment and leverage it to increase their returns, Hutchens said.Right now, Angel Oak's business is split about 50-50 between purchase and refi.What areas are best for investor purchasersBy state, Florida had the largest share (26%) of Waltz' business, followed by Ohio (17%) and Texas (12%). Of the top 10 cities for first-time real estate investors identified by LLC Attorney, which offers services to those starting a business, five are in Florida, which is considered a top destination for non-U.S. purchasers.Port St. Lucie and Cape Coral are the top two, followed by Miami, Jacksonville and St. Petersburg in positions five-through-seven. Just outside the top 10 are Tampa and Orlando at 14 and 17.Cleveland is third on the list, followed by Garland, Texas.The score takes into account the rental income potential of the area, as well as landlord-friendly laws.Globally, private-label mortgage-backed securitizations are increasingly including loans to foreign citizen investors. KBRA reported that noncitizen exposure in RMBS has grown 2.5 times over five years, primarily in non-prime transactions.Noncitizen exposure is heavily concentrated in non-prime PLS transactions, where the combined share is nearly 13.6% of the collateral pools, KBRA said."Foreign nationals have the highest default rate at 4.6%, compared to 1.7% for U.S. citizens," KBRA said. "This elevated default risk may reflect lower owner-occupancy (13.1%), reliance on foreign income, and limited credit history."What are the negative trends in the investor marketWhile investor capital gains when a property is sold were higher in the second quarter, up 1.7% year-over-year, the number of purchases, approximately 52,000, was down 6% during that time frame, a separate Redfin report said.The decline in purchase activity was due to higher borrowing costs, elevated prices and economic uncertainty — the same items impacting the owner-occupied market, a Redfin blog post noted.When selling a property, the typical investor earned $195,934 in capital gains, the post noted. That was 1.7% higher than for the second quarter 2024. But at the start of 2021, the annual gain was a whopping 30% from the prior year.Meanwhile 7% of homes in the areas in the Redfin study sold at a loss, versus 5% one year prior."For real estate investors, the numbers just don't pencil out the way they did a few years ago, whether they're looking to flip a home or rent it out," said Redfin Senior Economist Sheharyar Bokhari, in the post. "That doesn't mean investors are disappearing — they're still buying nearly one in five homes in the country — but they're being choosier about their home purchases, just like individual homebuyers."When they are selling, the purchaser in over half of the sales in the second quarter, 53%, was another investor, a recent report from Batchdata and CJ Patrick found.Small investors, those with between one and five homes, made up 87% of the property owners in the second quarter, the report said.
Wealthfront Home Lending: A Robo-Advisor Gets Into Mortgage Lending
While some banks and lenders exit the mortgage arena, Wealthfront is entering via its new venture “Wealthfront Home Lending.”The so-called robo-advisor based out of Palo Alto, California has decided to try their hand at mortgages, perhaps believing the worst is behind us.It’s been a rough few years for mortgage companies thanks to skyrocketing interest rates, but maybe just maybe the future is bright.Wealthfront plans to find out, though initially they’ll only roll out to a few states to test it out.If all goes well, they plan to expand both geographically and product menu-wise.Wealthfront Home Lending Fast FactsHome loan lending division of parent company Wealthfront (a robo-advisor)Offers home purchase financing and mortgage refinancingLocated in San Francisco, CA, founded in late 2025Initially launching in three state: California, Colorado, and TexasLending menu consists of conventional and jumbo loan optionsLoan amounts as large as $5 millionSay they offer mortgage rates well below national averageDespite being a robo-advisor and wealth management company, Wealthfront is expanding into home loan origination.It’s kind of similar to the recent Robinhood deal with Sage Home Loans, in that they’re expanding their product menu beyond just stock trading and wealth management.But Robinhood has simply partnered with a third-party mortgage lender to provide discounts to its Gold members, while Wealthfront is actually a standalone mortgage lender now.As noted, the name of the new division is Wealthfront Home Lending and it’s located in downtown San Francisco, just about 30 miles north of its parent company.The reason they got into mortgages is because the company discovered that homeownership is a “key goal” for its clients.Their mortgage waitlist has a median age of 35 and an average of $310,000 across their Wealthfront accounts, with the majority planning to buy a home in the next 6-12 months.The company said a large portion of waitlist signups came from clients living in Austin, Denver, Los Angeles, and San Francisco.And it just so happens they’re going to launch in three states to start, including California, Colorado, and Texas.Customers who live in other states can join their waitlist and will be notified if and when they launch in additional metros.Applying for a Mortgage with WealthfrontLike its parent company, they will lean heavily on technology to provide a more streamlined mortgage experience and also to save their customers money.In the process, they believe they’ll be able to offer mortgage rates below the national average.Of course, the national average isn’t necessarily a low rate. So it’s always important to still shop around to ensure there’s not an even better deal out there.Pricing aside, you’ll be able to “skip the hassle and pressure of a sales call” by starting the home loan process on your own.Borrowers will be able to apply directly from the Wealthfront app with no human intervention necessary, something those 30-somethings seem to favor these days.Once you input some basic information, you’ll be able to generate a personalized mortgage rate, get pre-approved and create a pre-approval letter, and officially apply and start the process.After your application is decisioned by a loan underwriter, you’ll be able to track status via the app, satisfy outstanding loan conditions, and even move on to the closing phase of the process, all electronically.Basically it’s going to be a very electronic/digital process that is as hands-off as you want it to be.And you’ll be able to move as fast or as slowly as you feel comfortable.What Does Wealthfront Home Lending Offer?Their lending menu is fairly no frills at the moment, but it will tick the major boxes and cover most vanilla loan scenarios.This means you’ll be able to get a home purchase loan or a refinance loan, such as a rate and term refinance or cash-out refinance.Wealthfront Home Lending is initially sticking to just conventional loans and jumbo loans, meaning mortgages backed by Fannie Mae and Freddie Mac, and those that exceed the conforming loan limit.Speaking of, they’re offering some really big loan amounts, likely a reflection of the affluent clientele at their parent company.Because they’re operating in high-cost metros like Austin, Denver, Los Angeles, and the Bay Area, they will offer loan amounts as high as $5 million with fixed or adjustable rates (ARMs).Their conventional ARM options will be available up to $1.2 million for a single-family home and up to $2.3 million for multi-unit properties.They plan to roll out jumbo adjustable-rate mortgages beginning in 2026.Notably absent are government-backed loans, including FHA loans, VA loans, and USDA loans.It doesn’t appear that they offer second mortgages either, so no home equity loans or HELOCs just yet.But that could all change over time as they get their footing and decide to expand.They lend on a variety of property types, including single-family homes, condos/townhomes, and even 1- to 4-unit investment properties.Wealthfront Home Lending Mortgage RatesWith regard to their mortgage rates, they seem to be approaching things from a discount mortgage lender perspective.But at the same time, serving affluent clients in expensive cities who are tech-savvy.Wealthfront notes that similar to their Cash Account, which is a high-yield checking account, they cut out the intermediaries and manual processes to reduce costs for their customers.By leaning on technology and automation, and dare I say AI, they’re able to run leaner and the savings are passed onto their customers.Because of their automated, self-serve process, mortgage customers will be able to obtain mortgage rates “well below the national average.”How well below is another question, but it’s a good start I suppose…To sum things up, Wealthfront Home Lending is yet another brokerage and fintech name entering the mortgage space.It’s good to see more competition and some fresh ideas in a space that is still somewhat old school.Those who are comfortable going it alone with vanilla loan scenarios, such as a W-2 job, high credit score, large down payment, should be well-served here.It sounds like a quick and painless process and if the rates AND fees are also competitive, they’re certainly worth checking out.Just note that you do need to be a Wealthfront customer with an open account that is funded in order to gain access to the mortgage waitlist. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)
Why non-QM underwriting is guiding mortgage lending's future
This has been a year of contradictions for mortgage lending. Rates remain elevated, inventory is scarce, origination volumes are weak — yet one segment of the market continues to surge. Non-QM isn't simply performing well in a difficult environment; it has become the unexpected center of gravity for the entire industry.At MBA Annual and ABS East, which ran in parallel this year, this shift was impossible to miss. Non-QM dominated panels, investor conversations, and hallway chatter. The data confirms the sentiment: Nomura's Global Markets Research reports that non-QM issuance is on track to reach $70 billion in 2025, up from $44 billion in 2024 — a remarkable 59% increase in the middle of a mortgage slowdown. When any market segment grows this quickly, skeptics ask the same thing: "Is this from loosening credit?" Nomura's answer is unequivocal — no. Non-QM underwriting standards remain tight, and the average FICO score for recent non-QM originations is among the highest ever recorded. This is not a repeat of the pre-2008 subprime era. The growth is not driven by higher risk; it's driven by better risk intelligence and risk management.Non-QM rebuilt the part of the process where the industry has always struggled: the first mile. Instead of waiting weeks to gain clarity on income, documents, and borrower fit, non-QM embraced what I call "Upfront Certainty" — moving the hardest parts of underwriting to the very first borrower interaction. Traditional mortgage workflows still depend on late-stage verification, multiple rounds of rework, and mid-process surprises. Non-QM flipped that model. Lenders now reach confidence faster, with fewer touches and far less operational drag.This transformation wasn't purely philosophical; it was technical. Non-QM was early to adopt systems that don't just extract data, but interpret it — systems that identify inconsistencies, determine what's missing, and surface risk factors before a file reaches an underwriter's desk. AI takes on the data-intensive work, while underwriters apply judgment to the nuanced cases that require human expertise. The result is not a replacement of underwriters, but a replacement of guesswork.Brokers accelerated this evolution. Once intelligence was embedded directly into TPO portals, submission quality rose almost overnight. Resubmissions declined. Pull-through improved. Borrowers received decisions faster. When brokers see a lender consistently deliver speed and clarity, the business naturally follows. Good underwriting makes good brokers better — and brokers reward the lenders who enable that.The economic impact is even more compelling. Lenders leveraging advanced non-QM workflows are scaling without proportional increases in headcount. They are entering borrower segments that once seemed too operationally heavy. They are defending — and in some cases expanding — margins in a market where margins are under immense pressure. In down cycles, operational leverage becomes a competitive advantage. Non-QM lenders have it. Traditional lenders, in many cases, don't.What is often misunderstood is that these changes won't remain isolated to the non-QM ecosystem. Everything non-QM has perfected — early-stage certainty, AI-driven verification, human-supervised decisioning, predictable workflows — will inevitably become standard across agency lending as well. The signals are already clear: stronger GSE engagement with tech partners, increased focus on early-stage income precision, and a shift toward audit-ready files from day one.Borrower expectations have changed just as dramatically. They now expect the speed of a fintech with the certainty of a bank. They will not return to a world where a mortgage requires 45 days and 20 touches to complete. The first mile has already shifted, and once that shift happens, the industry rarely goes back.Nomura describes non-QM's growth as "increasing market penetration," but the story is bigger than that. Non-QM has redefined how underwriting is done. It has created a blueprint for modern lending — one built on intelligence, precision, and early certainty. And whether lenders realize it yet or not, this blueprint is coming for every part of mortgage.This niche blueprint of today will be the industry standard tomorrow.
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