Mortgages finally loosening a bit?

Question

A lot of people (for good reason) focus on rates and their movements. One of the interesting things to see is programs that go away and come back depending on appetite or comfort levels in the market by the banks. For example, the 15% down DSCR loans were really popular when everything was going gang busters 2019-2021. They all but went away or had price adjustments that made them effectively useless when rates started to spike. Those 15% down DSCR loans seem to be making a comeback and while the price adjustments are not great, they are better than they were in the past 2 years, and they are becoming more and more common again. The 0% down physician loan unicorn that gets talked about but no one has ever seen close in reality is even starting to edge into the market again. From my perspective, this is usually a sign of one of 2 things: 1) a market in repair where banks are starting to loosen things because they feel more comfortable with stability in the market or 2) banks are desperate for more business/volume so they are underwriting risky loans to keep volume flowing.

The timing of some of these coming back and the very slow roll outs right now feel like cautious optimism that the market is showing signs of stabilizing, and there has been a decent amount of positive tailwind data (for mortgages, not necessarily for the economy); between slight increases in unemployment and reported slight decreases in inflation. No major, earth shattering, uptick in foreclosures has led more and more banks to start dipping back into the swimming pool and test the waters. This is just my perspective right now, and curious if anyone else is seeing similar/agrees/disagrees?

Clayton Silva · Answer

Agreed, and honestly we just rolled a physician loan out (and it is bonkers), but on the wholesale side I think only Huntington does them anymore is all I know of.  I am cautiously optimistic that things will level out here soon, and it could be a very unique time indeed.  2025 was a great year, and I hope it just keeps getting better!

Ryan Muska · Answer

"The 0% down physician loan unicorn that gets talked about but no one has ever seen close in reality" - That line made me laugh because it is so true.

Which banks do you see doing the Physician loans again? I recall Flagstar being one of, if not the, only banks doing it on the Retail side. I'd be intrigued to see if any of them would start doing it on the wholesale side.

I've seen some of the smaller, niche banks allowing for DSCR 15% down for the last few years, but never have I sent business to them because the process usually is awful and the rate is high.

I think part of it has to do with the administration. Regardless of political opinion, the POTUS is basically demanding the rates be lower for mortgages and consumer facing lines of credit. Maybe the banks are banking on him getting his way.

I do think that it is a very exciting time to be in the industry because I believe 2026 will be an even better year for mortgages than 2025 was.