Through the first six months of 2025, the share of U.S. home sales that went to real estate investors ranged from 29% to 32% — roughly 3 in every 10 purchases.

Despite affordability challenges, investor-buyers have sustained their record market presence throughout 2025 — exceeding pandemic-era peaks of 27.2% in February 2022 and post-pandemic peaks of 27.1% in January 2024.

Investors maintained a 30% purchase share in September, according to real estate analytics firm Cotality. That share fluctuated between 15.7% and 20% from January 2018 to January 2020, prior to the onslaught of market distortions wrought by pandemic-era stimulus.

Elevated investor share is one consequence of affordability challenges that have defined the housing market since early 2023, increasing demand for rentals and causing first-time homebuyers to claim just 1 in every 5 home sales in 2025.

More than 85% of home investors own fewer than five properties, highlighting the distributed nature of the residential investor lending segment.

With historically low home sales and mortgage production having brought the housing market to a crawl since 2023, non-qualifying mortgage (non-QM) originations — which include business-purpose investor loans — have expanded their market presence.

At the same time, nonconforming mortgage originations have risen amid declining conforming volumes in recent years, which mortgage advisory firm Mortgage Capital Trading has directly tied to the expansion of private lending.

‘Writing is on the wall’

Stacy Speas, senior vice president of loan servicing operations for Cornerstone Servicing, a division of Cornerstone Capital Bank, tells Scotsman Guide that “the writing is on the wall” when it comes to growth in the non-QM segment.

“Borrowers are really dictating the kinds of loans that they need in the market,” says Speas, who oversees all performing loan servicing for Cornerstone, including a non-QM book of subservicing business that is about 55% investor and 45% non-investor loans.

Debt-service coverage ratio (DSCR) loans have surged in popularity for financing rental properties, while residential transition loans (RTLs) help to finance renovation and resale projects, also known as fix-and-flips.

While many home investors pay completely in cash, investor mortgage loans made up roughly 28.5% of nonconforming originations in August, according to Optimal Blue, while owner-occupied non-QM originations comprised the remaining 71.5%.

The sustained rise in non-QM and business-purpose originations highlights how originators are finding more production opportunities outside agency programs.

But distinct pain points exist for self-employed and business-purpose borrowers within the non-QM space, Speas says. Loss of income presents the largest driver of owner-occupied non-QM distress, while loss of rental payments most directly impacts business-purpose borrowers.

“There’s really not a material difference in terms of performance” between the distinct non-QM segments, Speas says, “and for that matter, not a material difference in performance against the rest of our book.”

Non-QM mortgage bond issuance reached a record $20 billion in the third quarter, with September hitting a monthly record of about $7.5 billion, according to ratings agency DBRS Morningstar.

‘Crowding out first-time buyers’

Selma Hepp, chief economist at Cotality, tells Scotsman Guide that strong issuance reveals the secondary market’s “willingness to absorb risk for yield,” but she warns of “affordability pressures coming from investor presence in the lower price tiers, and how that’s crowding out first-time buyers.”

Despite investor purchase volumes remaining about 25% below 2021 levels, in the first six months of 2025 investors improved upon monthly totals from the same period in 2024, buying 85,000 homes per month compared to 84,000 monthly in the first half of last year.

Investor purchases exceeded 100,000 units in May, June and July as home sellers piled into the market — only to confront lackluster demand from non-investor buyers. Sellers outnumbered buyers in the market by a margin of more than 30% over that time period.

The analytics firm BatchData observes investors’ elevated share as “critical liquidity,” helping to prevent “potentially destabilizing price volatility” as home prices around the U.S. cool in response to affordability pressures and weak demand.

However, listings platform Realtor.com echoes Hepp’s concerns, exploring in a recent research brief how residential real estate investors contribute to home price growth in a way that may amplify affordability pressures on typical buyers.

Either way, investor purchase share is expected to remain above 25% in 2026 and 2027, Cotality says, as affordability constraints persist and home prices soften further, maintaining current dynamics between investor and non-investor buyers.

Mortgage rates are expected to remain range-bound between 6% and 6.5% through 2026, according to the Mortgage Bankers Association, while government-sponsored mortgage giant Fannie Mae projects home price growth of just 1.3% in 2026 and 1.2% in 2027.

With inflation outpacing home price gains since June, according to ratings agency S&P Global, the engine of wealth creation in owning residential real estate has broadly shifted from asset appreciation to rental cash flows for the foreseeable future.

Hepp says non-QM underwriting has remained “disciplined,” which bodes well in the event that months of slow hiring turn into higher job losses, given that momentum in housing demand is dependent on improvement in labor conditions and consumer attitudes on the overall economy.

‘Less of a lift for borrowers’

The unemployment rate ticked up to 4.4% in September, though hiring gains also increased, according to a shutdown-delayed government jobs report released last week.

Susan Hosterman, a senior director at Fitch Ratings and the primary analyst covering non-QM collateral in the company’s residential mortgage-backed securities (RMBS) group, says issuers have kept their credit criteria “consistent” amid increasing volumes, with average loan-to-value ratios around 70% and average credit scores in the mid-700s.

“Issuers are issuing more than once a month, when historically they’ve issued once a month,” Hosterman tells Scotsman Guide, underscoring the appetite among secondary investors.

“We’re not seeing a drop in credit on the new issues,” she adds, “even though there’s a rise in volume, so the originators are still keeping their guidelines tight and they’re being prudent in underwriting.”

Hosterman suggests that some of the rise in non-QM volumes across the sector may stem from a growing underwriting parity between qualifying mortgages and non-QM loans, describing the difference between getting a prime loan and a non-QM loan “not a huge disparity anymore.”

“It’s not as much of a heavy lift to go for a non-QM bank statement product,” says Hosterman. “You’re still showing 24 months of income or 12 months of income, but you’re not getting out all your W2s, all your pay stubs and your bank statements as you would with the prime, full-documentation deal. It’s a little bit less of a lift for borrowers, I feel.”

Still, Cotality’s Hepp says serious delinquencies (90 days or more past due) have risen from 0.5% in mid-2022 to around 2% as of early 2025, highlighting a trend to watch closely as post-pandemic “vintage sensitivity” emerges for 2023 and 2024 non-QM pools.

“Rising unemployment or home price stagnation could pressure non-QM performance, especially for [alternative documentation] and investor-heavy pools,” says Hepp. “Longer term, I don’t think we are going to see a significant change or slowdown in investor activity.”