A Realtor.com report reveals loans under $100,000 fell to less than 3% of all originations
The share of small mortgages — loans with principal balances of $100,000 or less — has collapsed from more than 12% of all originations in 2013 and 2014 to less than 3% in 2025 and 2026, according to a new Realtor.com report.
Fixed origination costs, not just a shrinking pool of affordable homes, are the primary force behind the retreat.
Home sales at $150,000 or less accounted for 36.7% of all purchases in 2013, per Home Mortgage Disclosure Act (HMDA) data from the Federal Financial Institutions Examination Council (FFIEC) cited by Realtor.com. By 2026, that share had dropped to 8.8%.
More telling is the ratio of low-priced home sales to sub-$100,000 originations, roughly three to one before the pandemic, widened to nearly four to one by 2025 and 2026.
“Small mortgages are not simply fading because lower-priced homes are harder to find; the financing itself has become harder to access,” said Joel Berner, senior economist at Realtor.com in the United States.
“When the share of low-priced home sales is roughly four times the share of small mortgages, it points to a market where the costs and complexity of originating a modest loan can stand between buyers and an attainable home.”
Craig Riddell of LoanLogics says some homeowners are turning to HELOCs and home equity loans with the expectation that rates will fall, creating risks if borrowing costs remain elevated longer than anticipated. https://t.co/3rtvWTQEtl
— Mortgage Professional America Magazine (@MPAMagazineUS) October 7, 2026
Rural markets absorb the steepest impact
Iowa recorded the highest state share of small-balance originations in 2025 at 9.6%, followed by Wyoming (8.6%), Mississippi (8.5%), West Virginia (8.2%), and New Mexico (7.7%).
In rural ZIP codes, 7.7% of all 2025 mortgages carried balances below $100,000. That's more than three times the 2.3% share in suburban markets and triple the 2.4% in urban ones.
Separately, 20% of small loans originated in 2026 were for investment properties, against 6.3% for all mortgages.
Brokers tracking where first-time homebuyers can still find viable entry points in 2026 will recognize the structural financing gap the rural data reveals.
Strong credit, higher rates for small-mortgage borrowers
The borrower profile for small mortgages does not explain the rate premium those buyers pay.
In 2026, buyers with balances under $100,000 averaged a FICO score of 737, virtually identical to the 736 average across all buyers. Their median down payment was 34.4% of the purchase price, against 14.6% for buyers overall.
Despite those indicators, small-mortgage borrowers have consistently paid higher rates, a direct consequence of fixed origination costs that do not contract with the loan balance.
“Small-mortgage borrowers are bringing strong credit and significantly larger down payments to the table, yet they continue to face higher rates,” Berner said.
“Making it easier to responsibly originate these loans could help more buyers finance lower-priced homes, particularly in rural communities where small mortgages remain an important part of the market.”
The 21st Century Renewing Opportunity in the American Dream (ROAD) to Housing Act, enacted on July 11, targets those economics. The law authorizes a four-year Federal Housing Administration (FHA) pilot to offset fixed costs on loans of $100,000 or less, mandates a study of originator compensation and points-and-fees limits, and includes appraisal reforms for low-balance transactions.
Realtor.com estimates the US faces a 4.03 million-home supply gap, reinforcing that origination reform and supply expansion must advance together.
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