Small Mortgages Under $100K Vanish, New Act Aims To Revive

The proportion of small-mortgage loans under $100,000 has significantly decreased, representing only 2.3% of the total market in the current year, according to a study by Realtor.com®. This figure marks a decline from 2.7% in 2025 and 3.1% in 2024, and is a stark contrast to 2016 when these small mortgages constituted 9.9% of the market. The steady reduction in small-mortgage origination coincides with a substantial increase in home prices. However, the 21st Century Road to Housing Act, enacted this year, introduces a four-year pilot program designed to incentivize lenders to offer more small mortgages. This initiative is one of nine banking provisions within the act aimed at improving mortgage accessibility. Senior economist at Realtor.com®, Joel Berner, expressed optimism that this program could lead to positive changes. The Federal Housing Administration (FHA) will administer the pilot program, which includes provisions for direct payments to lenders, adjustments to loan terms, and funding for closing costs, all intended to encourage greater lender participation in the small-mortgage market. Furthermore, the act directs the Consumer Financial Protection Bureau (CFPB) to investigate how loan originator compensation structures, including points and fees, impact the availability of small-dollar mortgages. While the act outlines these measures, it does not provide direct funding for the programs; such funding will require future congressional appropriations. In a report, Berner highlighted that the shrinking share of small mortgages and the premium rates associated with them underscore market inefficiencies that the 21st Century Road to Housing Act aims to address. He noted that data suggests lenders exhibit reservations about originating these loans, making them difficult and costly for prospective buyers to secure. The decline in small-dollar mortgages is not solely attributable to rising home costs, as the share of these loans has decreased at a faster rate than the sales of less expensive homes. For instance, in 2013, home sales priced under $150,000 accounted for 36.7% of all home purchases; this figure has since fallen to 8.8%. Concurrently, mortgages under $100,000 saw their market share drop from 12.9% in 2013 to the current 2.3%. This trend indicates a reduced volume of small-dollar mortgages being written in recent years, suggesting systemic issues beyond general market appreciation.