Find Your Mortgage Niche to Future-Proof Your Profitability

The fallout from the Great Recession has had a lasting impact on the mortgage industry. The boomerang effect of the subprime mortgage crisis has seen lenders passing over less-than-perfect borrowers in favor of safe, easy, full-doc W2 borrowers with a 720 FICO score and plenty of assets.

But with increasing home values, rising rates, growing originator costs, low inventory, and booming competition, lenders are faced with a choice: expand your borrower criteria or take the hit to your bottom line.

Lenders who only work with ideal borrowers likely feel like there’s a lack of clients to be had, but there’s not. There is a massive gap of would-be borrowers who could be buying today but haven’t, either because they don’t believe they’re qualified or because they spoke with a lender who turned them down because their circumstances were too nuanced or specific to deal with.

In the U.S., 23% of consumers have a FICO score between 600 and 699, and another 6% have a score between 580 and 599. That means that roughly one in three Americans may be under the (often incorrect) assumption that they cannot qualify for a mortgage.

There is ample opportunity out there for lenders who are willing to carve out a niche in the market to cater to borrowers in under-served categories and communities that have been passed over by banks and credit unions who can’t be bothered.

And let’s be clear here: expanding your borrower criteria is not an endorsement to fall back into the risky or lazy lending practices that got us where we are today. Rather, it’s a call-to-arms to find a new mortgage niche and embrace borrowers that don’t fit neatly into the “low-risk, low-effort” box.

Find Your New Niche

Our world has changed rapidly since the crash, and how people earn a living has changed, too. The proliferation of technology and the rise of the ‘gig’ economy has empowered consumers to forge their own path. New technology players have disrupted the status quo in nearly every industry, irrevocably altering how we shop, eat, travel, work, play, relax, and buy a home.

Rocket Mortgage is already here, and now Zillow has entered the lending space. Disruption surrounds us, and finding a mortgage niche to specialize in can make you more valuable and provide a safety net as the market shifts.

As Shirleen Von Hoffmann, principal at Home Builders Edge, notes:

“Having a niche will give you value. Having value will attract potential homebuyers who will choose you rather than an online source for their mortgage needs. Cultivating a niche to attract business has been a strategy since the beginning of time in sales, but it’s more important now than ever.”

If you’re only going after cookie-cutter borrowers, you’re likely a small fish in a big pond with little room to differentiate yourself from the plethora of competitors in the market. But take the time to specialize in a niche segment of the market and suddenly you’re the big fish in a small pond, with little competition and built-in referral sources from the outset.


14 Niche Lending Specializations to Consider:


1.) Quick-Turn Specialists

Quick-turn specialists promise an incredibly quick turnaround and fine-tuned their process management to ensure max efficiency and accuracy.

2.) Down-payment Specialists

Down-payment specialists focus on down-payment assistance programs, bond loans, and financial-aid programs in their area.

3.) Credit-Fix Specialists

Credit-fix specialists work with loan files involving credit-history challenges. This is a specialty that will help get you in good with builders and real estate agents. Because these deals are tougher and require more work on your end, if you can establish trust with builders and agents and assert your expertise in this niche, they will keep sending new business your way.

4.) File Specialists

A file specialist knows how to put a pristine file together that will get loan approval. File specialists know how to put files together in a way that anticipates underwriting questions, and their attention-to-detail expedites the loan through process and underwriting to quickly get to the closing table without any hiccups.

5.) Construction Loan Specialists

As low inventory continues to be an issue in the industry, construction loan specialists are in particularly high demand. In many towns, you’ll only be able to find one or two originators who really know the ins-and-outs of custom construction financing. As a result, it’s easy to become the go-to originator for custom home builders and buyers if you can establish a reputation as an expert in this niche.

6.) Reverse Mortgage Specialist

Reverse mortgage specialists are experts at helping borrowers who want to use equity from their homes to create monthly income. Because these loans are so complicated, buyers search specifically for originators who make reverse mortgage loans their bread and butter, and reverse mortgage specialists frequently get referrals from other originators because they don’t have the time or the desire to learn the nuances of reverse loans.

7.) First-time Homebuyer Specialists

First-time home buyers look to originators and real estate agents for guidance on the stressful journey to homeownership. First-time homebuyer specialists are great at educating first-time buyers. They know the nuances of loan programs for first-time buyers and are willing to work with builders and real estate agents. This specialization can be very gratifying. Putting someone in a home for the first time is a big deal, and a great first experience with a lender is bound to bring borrowers back when they’re ready to refinance or buy a new home.

8.) Relocation Specialists

Relocation specialist often work directly with HR departments at larger companies to obtain leads for employees who need to relocate. Many relocation specialists work nation-wide to provide services to employees that have been transferred by their employers. This specialization often opens up a referral avenue that brings new refinance and purchase-mortgage business your way from other company employees who aren’t relocating but need a lender.

9.) Real Estate Agent Specialists

A real estate agent specialist knows what an agent wants and knows how to deliver on their promises. These specialists are active in the community, great at providing borrower education resources and quick turn-around times, know the ins-and-outs of Realtor purchase contracts, and are knowledgeable about the pitfalls related to financing a resale home. As a result, they stay busy with agent referrals and frequently work with agents at open houses to present a unified front with borrowers from the outset.

10.) Home Loan Broker

Home loan brokers have access to many different lenders and therefore have access to the best rates and programs available. They are able to switch up their business as needed around the service levels provides. This niche can be particularly attractive to those who are locked in with one lender, one service provider, and one option for providing financing.

11.) Homebuilder Specialists

You know the builders’ business. You understand construction processes, terminology, and priorities. You understand their timelines, how they communicate, and what they need to take great care of their clients. In return, you’re always busy with referrals from the builders.

12.) Union Specialist

Union specialists are involved in unions and attend union meetings and events, eventually becoming a part of the community. These specialists help educate union members about their options. They advertise in union magazines and websites, and end up becoming the recipient of most union referrals in their industry.

13.) FHA Specialist

Federal Housing Administration (FHA) specialists do well financially because there are so many FHA loans out there. Specializing in FHA loans can help you increase your margins dramatically because it’s such a highly utilized loan product, but there are nuances to FHA loans that many originators don’t understand. If you specialize in all aspects of FHA lending, you will be busy with referral busy from builders, agents, and other originators alike.

14.) VA Specialist

Veteran Affairs (VA) specialists understand the many nuances of VA loan programs and attend veteran events and fairs to market to veterans and educate them about VA loans.


The Rocket Mortgages of the world will never be able to fully dominate in a specialty market; complex borrowers require complex loans, and the originators who take the time to master the nuances of a niche mortgage market will protect themselves from becoming redundant as technology players bent on eliminating the human element of the lending experience dominate the conventional loan space.

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