Cardinal Financial unveils non-QM product suite

The lender’s wholesale division is now offering a nonqualified mortgage (non-QM) loan product suite aimed at serving consumers who have outside-the-box financial profiles. Karl Benjamin, the company’s executive vice president of wholesale, highlighted the new products as solutions for leveling the mortgage market playing field.

“Our Non-QM suite equips brokers with a comprehensive solution to meet diverse borrower needs,” Benjamin said in a statement. “With advanced technology, a broad product lineup, and a commitment to broker success, Cardinal Financial Wholesale provides the tools brokers need to excel.” 

Cardinal Financial’s non-QM suite will kick off with four loan products. Non-QM Prime is designed to offer “flexible documentation” to borrowers with strong credit profiles. This means more lenient requirements that allow room for thin credit profiles or irregular income sources — which are common among self-employed borrowers. Non-QM Prime Plus will offer similar benefits to Non-QM Prime with higher loan limits.

Cardinal Financial is also offering real estate investor financing with its Foreign Debt Service Coverage Ratio (DSCR) and Investor Solutions DSCR products. The former offers financing to international investors, while the latter offers investment financing based on the potential cash flow of the subject property.

Brokers can manage and originate these products from Cardinal Financial’s Octane loan origination platform. The company designed the platform to help lenders process complex loans with efficiency.

Non-QM loans are more lenient with qualification requirements like credit scores and income. But they can be more expensive due to higher mortgage rates and monthly payments.

This form of lending is growing in popularity, and lenders seem to be catching on. One of the nation’s top-10 lenders, Rate, increased its presence in non-QM market in 2024 by funding $1.3 billion in non-QM loans through a proprietary product suite.

Non-QM loans are a go-to option for a growing share of borrowers who can’t access traditional mortgages. Recent data from the Federal Reserve Bank of New York showed higher rejection rates on all types of credit applications compared to 2023. And a Bankrate survey also found that 48% of applicants for loans or other financial products were denied in 2024.

Generation Z led all age groups with the highest application rejection rate at 65%, Bankrate reported. But this group also relies on gig work more than any other demographic. According to a survey from TransUnion, Gen Z and millenials were the most likely to use gig work as a primary income source. About one-third of Gen Z respondents said they planned to take on more gig work this year.

“The gig economy has earned a strong reputation among workers as a reliable source of income that allows for unparalleled flexibility,” Tracey Lazos, senior director of TransUnion’s gig economy business, said in the report. “Our research indicates that this trend is likely to continue as more seek a primary or supplementary income from gig work.”

As gig work, stringent credit requirements and other factors continue to challenge prospective mortgage borrowers, non-QM products could become even more popular among brokers and their clients.