The share of mortgages under $100,000 has declined dramatically over the past decade, from slightly over 1 in 10 home loans to barely over 1 in 100.

But the lack of small-dollar mortgages being originated is not the result of too few affordable homes, says Joel Berner, senior economist at Realtor.com, who spearheaded new research published Wednesday exploring the trend.

“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,” said Berner in the report.

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Small-balance mortgages accounted for just 2.7% of home loans in 2025 and 2.3% in 2026, according to Realtor.com, down from around 12% of originations in 2013 and 2014. The decline in small-dollar loans underscores a persistent financing gap keeping certain borrowers from accessing mortgage credit.

In 2013, residential properties purchased for $150,000 or less made up almost 38% of home sales, Realtor.com found. That share has fallen to about 9% so far in 2026.

A precipitous rise in national home prices over the past 15 years — including consecutive years of double-digit gains during 2020 and 2021 — has shifted home prices and loan balances considerably higher.

While the general increase in home values supports fewer sales under $150,000, the ratio of low-price home sales to small-dollar mortgages has widened over that period, Berner noted, suggesting that “the frictions associated with making small loans have intensified.”

The 21st Century ROAD to Housing Act, which became law in mid-July, contains specific provisions designed to expand mortgage liquidity for small-dollar loans, thereby supporting mortgage access for lending on the millions of older, less expensive homes in the U.S.

Many of those homes are concentrated in rural communities where home values haven’t ballooned as dramatically as in supply-constrained metro areas. In rural areas, small-balance mortgages are thus a critical cog in the consumer credit market.

In 2025, Iowa had the largest share of mortgages originated under $100,000 at 9.6%, according to Realtor.com, followed by Wyoming at 8.6% and 8.5% in Mississippi. West Virginia and New Mexico rounded out the top five, with 8.2% and 7.7% small-dollar mortgage share.

Taking a broader view, about “7.7% of mortgages issued in rural ZIP codes in 2025 had balances under $100,000, compared with 4.9% in town ZIP codes and just 2.4% and 2.3% in urban and suburban ZIP codes,” said Realtor.com’s report.

The economics of originating mortgages disincentivizes lenders from originating smaller loans, experts have told Scotsman Guide. Percentage-based compensation on mortgage loan amounts and home sales prices often make small-dollar originations unprofitable, especially as loan origination costs have skyrocketed over the past decade.

Strict minimum property requirements for government lending programs — which were also targeted for reform in the bipartisan housing bill, as well as through a Trump administration executive order — add another impediment to originating smaller loans on more affordable properties that may require some degree of rehabilitation.