A Kiavi executive says the newcomers are staying, giving brokers more lenders to weigh
Despite increasing mortgage rates, investor loans continue to make up a large portion of the overall mortgage industry in 2026. One type of loan that continues to grow in popularity is the debt service coverage ratio (DSCR) loan.
With the growing demand for these loans, conventional lenders are also stepping into the space, with both Rocket Pro and United Wholesale Mortgage adding these products over the last five years.
Non-qualified mortgage (non-QM) lenders have moved into DSCR lending too, adding more competition for investor loans. A broker choosing where to send an investor file now has more lenders to weigh, each trying to win the deal in its own way.
Charles Goodwin (pictured top), VP and head of bridge and DSCR lending at Kiavi, has watched that competition build. Kiavi has been operating in this space well before the larger lenders arrived.
"When you have a lot of competition coming in doing similar types of loans, it's hard," Goodwin told Mortgage Professional America. "But I think it's a good natural evolution for this private lending space. A lot of people five and 10 years ago would have viewed this private lending space as a little Wild Westy, the old-school hard money lending that people think about. I just don't think that is what it is. I think it's matured a lot."
How lenders compete now
Institutional capital has been flowing into DSCR, according to Goodwin, and that has increased competition among the lenders originating the loans. The effect shows up most clearly in pricing.
"As Treasury yields have run up 50, 75 basis points over the past six months, DSCR rates have not run up fully with it," he said. "You've started to see DSCR rates catch up a little bit, meaning they're increasing, but for a while, as Treasury yields were going up, you had DSCR rates holding more or less steady. It's that spread compression as capital from the capital markets gets compressed, and then lender margin gets compressed. At the end of the day, it's good for the end borrower."
Pricing is only one way lenders can respond when competition rises. Goodwin said the pattern resembles any other credit cycle, with customer service and operational efficiency also becoming competitive factors.
"You will have lenders start to differ in their underwriting criteria," he said. "Some lenders have gone wide on the credit box, and they're using that as a way to attract customers. Some lenders have gone very narrow on their margins to be able to put a competitive price in front of customers. And some are somewhere in between and focused on maybe business development and marketing as a way to attract customers."
No matter what strategy is employed, Goodwin believes the most important thing is that lenders don’t take too many risks to attract business, especially in a challenging market.
"Lenders, from my perspective, for the most part are maintaining high credit quality, which I think is super important," he said. "We talk about it a lot as industry leaders within the space. Even though there are competitors that I'm talking with regularly, there's an existential threat if too many lenders become too wide of a credit box and that ultimately hurts delinquencies too much.
“The biggest problem any of us would have is if the capital at large gets too concerned and starts pulling back. But I don't really see it happening."
Competitors here to stay
By Goodwin's count, DSCR loans now make up 30 to 40% of non-QM securitization volume, roughly double their share three years ago. Securitization is how many non-QM lenders pool loans and sell them to investors.
He said that trend has been most notable over the past 12 to 18 months and has changed how he views the new entrants to the market.
"When Kiavi started to get wind of non-QM doing more DSCR in this space, it was a good learning lesson," he said. "I wrote it off a little bit. I started to say, ‘I don't know that they're going to become true competition to us, because it's a different client base that at least we were competing with or going after.’ Ultimately, I was a little bit wrong with this."
Goodwin said the unexpected path of mortgage rates has changed his outlook on how long some of those new competitors will hang around.
"I was definitely a believer that interest rates would come back down," he said. "When that happened, those non-QM lenders would go back to focusing on their more core owner-occupant non-QM type of products. And that was wrong."
Goodwin said he expects an inflationary environment to keep rates in a fairly tight range for the foreseeable future. Real estate investors, for their part, have kept finding ways to do deals in every market, he said.
"The tough times force lenders and everyone else to get better at what they do," he said. "You control what you can control, and you've got to get better at delivering to your customers. That is ultimately what it always comes down to. Do you have a good product that you can deliver excellently to the customer? And if you do, you'll have a business to run."
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