Home Financing

Housing is the largest regular expense for most American families. And although prices vary significantly across the nation, living in a lower-cost area does not always ease the path to homeownership. Many families in less expensive regions struggle to buy a home because small mortgages are hard to obtain.

High fixed costs and a system that ties lenders’ compensation to loan size have made smaller mortgages—those under $150,000, for example—less profitable than larger ones for banks, credit unions, and other traditional mortgage lenders. As a result, millions of families have turned to alternative financing products to purchase homes, but these options often cost more and offer fewer protections than mortgages.

Pew studies the alternative financial arrangements that people use to buy lower-cost homes and examines the barriers that lenders face to offering small mortgages—with the goal of informing policymakers and other stakeholders about market practices, evaluating borrower protections and experiences, and promoting access to safe, affordable home loans.