Small Mortgages Are Becoming Rare Despite Federal Efforts
Mortgages with balances of $100,000 or less have become increasingly rare in the U.S., according to a Realtor.com® report. These small mortgages accounted for more than 12% of all home loans originated in 2013 and 2014 but now represent less than 3%. The decline is attributed not only to fewer low-priced homes being sold, which dropped from 36.7% of sales in 2013 to 8.8% in 2026, but also to structural barriers that make small loans uneconomical for lenders. The report highlights a growing gap between the availability of lower-cost homes and access to financing for them. Small mortgages are most common in rural areas like Iowa and Wyoming, where they represented up to nearly 10% of all originations in 2025—more than three times their share in urban or suburban regions. Despite strong borrower credit profiles and larger down payments from small-mortgage buyers, these loans often come with higher interest rates. The report also notes that a growing portion of small mortgages are used for investment properties rather than primary residences. The 21st Century ROAD to Housing Act aims to address the fixed costs and regulatory hurdles associated with originating smaller loans by reforming appraisal processes and fee structures.
Topics: housing market lending trends low-cost homes rural housing