In this article
Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The Department of Housing and Urban Development (HUD) has been given the power to run a four-year pilot programme for mortgages of US$100,000 or less, the trade publication Inman reported on 7 October 2026. The power sits in Section 105 of the 21st Century ROAD to Housing Act, and it arrives as loans of that size have almost disappeared from American home finance.
Inman's report draws on an analysis by Realtor.com, which puts the share of small-dollar mortgages at 2.3% of all mortgages in 2026, down from 12.9% in 2013. That is a fall of 10.6 percentage points in thirteen years. Over the same period, the cheap homes those loans used to buy have become a much smaller share of sales.
The word that matters in the story is "could". The law allows a pilot; it does not create one. What follows sets out what the Act permits, the two dates it fixes, and what the Realtor.com figures say about who still borrows less than US$100,000 and where.
Loan ceiling from Section 105 of the 21st Century ROAD to Housing Act; shares from a Realtor.com analysis, both as reported by Inman on 7 October 2026.
What Section 105 allows HUD to do
According to Inman, Section 105 of the Act lets HUD set up a pilot programme lasting four years for mortgages of US$100,000 or less. The ceiling is measured at origination, which means the size of the loan on the day it is made, not the price of the home and not the balance left after years of repayments.
The section gives the department a range of tools rather than a single scheme. As Inman lists them, the pilot could:
- make direct payments to lenders that write these loans;
- reduce FHA terms and costs;
- offer grants towards the appraisal, the down payment, title insurance and closing costs;
- pay for outreach to lenders and for technical assistance.
Read together, the tools point at both sides of the counter. Direct payments, outreach and technical assistance are aimed at the lender. Grants for the appraisal, the down payment, title insurance and closing costs are aimed at the bills a buyer meets on the way to the closing table. The FHA item touches the terms of the loan itself.
Related readAustralia's big four banks pass on the cash rate rise from 9 OctoberInman's account does not give amounts for any of these payments or grants, and it does not say which of the tools HUD intends to use, if any. Those choices belong to the design of the pilot, which the report does not describe.
Two dates: July 2027 and July 2029
The Act does fix a calendar. Inman reports that HUD has until July 2027 to establish the pilot and until July 2029 to launch it. Nothing in the report suggests that lenders or borrowers can apply for anything today.
- October 2026HUD confirms the Act is law. Section 105 gives the department the power to create a pilot.
- By July 2027Deadline for HUD to establish the pilot programme.
- By July 2029Deadline for HUD to launch it. The pilot would then run for four years.
That the Act is in force is confirmed by HUD itself. In a news release dated 7 October 2026, the department refers to the 21st Century ROAD to Housing Act as law, and notes that it removed the permanent chassis requirement for manufactured homes. That release concerns manufactured housing, not small mortgages, but it settles the status of the legislation the pilot depends on.
The law permits a pilot; it does not open one
As Inman reports it, Section 105 lets HUD create the programme and sets deadlines of July 2027 to establish it and July 2029 to launch it. Inman's report does not describe any grant, payment or FHA change in the section as available yet.
How far small loans have fallen
The case for a pilot rests on the Realtor.com figures that Inman relays. In 2013, mortgages of US$100,000 or less made up 12.9% of all mortgages. In 2026 the share is 2.3%. A loan type that was roughly one mortgage in eight has become roughly one in forty-three.
Part of the explanation is on the shelf rather than at the bank. The same analysis counts home sales of US$150,000 or less: they were 36.7% of sales in 2013 and are 8.8% so far in 2026. More than a third of all sales used to fall under that price; now fewer than one in eleven does, a drop of 27.9 percentage points. When low-priced homes are a smaller part of what changes hands, small loans have less to finance.
Related readAustralia: RBA finds under 1% of mortgage borrowers in negative equityThe two measures do not use the same threshold, US$150,000 for the sale price and US$100,000 for the loan, so they cannot be laid directly on top of each other. Realtor.com instead compares them as a ratio. From 2013 to 2019 there were about three low-priced sales for every small mortgage. In 2025 and 2026 the ratio is closer to four to one.
That shift is the part of the analysis that goes beyond supply. Low-priced sales have fallen, and small mortgages have fallen further. In other words, a low-priced sale is less likely than it was to be matched by a small mortgage. Inman's report does not break down how the remaining low-priced sales are paid for, and this article does not guess.
Rural ZIP codes and five states lead
Small mortgages have not vanished evenly. Realtor.com's figures for 2025, as reported by Inman, sort ZIP codes into four types. Small mortgages were 7.7% of mortgages in rural ZIP codes and 4.9% in town ZIP codes. In urban ZIP codes the share was 2.4%, and in suburban ones 2.3%. The step down from rural to town is 2.8 percentage points, and from town to urban a further 2.5 points, while urban and suburban ZIP codes sit a tenth of a point apart.
The rural share is therefore more than three times the suburban one. For a loan officer or a listing agent in a rural county, a mortgage under US$100,000 is still an ordinary part of the working year. In the suburbs it is the exception.
Related readWhy Australia fixes so few home loans, and how the US and Korea differThe state figures tell the same story from another angle. The five highest shares of small mortgages in the Realtor.com data are Iowa at 9.6%, Wyoming at 8.6%, Mississippi at 8.5%, West Virginia at 8.2% and New Mexico at 7.7%. The five sit within 1.9 percentage points of one another. Even in Iowa, the state at the top of the list, fewer than one mortgage in ten is a small one.
This geography matters for the pilot. Section 105, as Inman describes it, includes outreach to lenders and technical assistance among its tools. The data show where the lenders who still write these loans are most likely to be found, and where a programme of this kind would have the most existing business to build on.
One small loan in five goes to an investor
The most striking finding in the analysis concerns the borrowers. A small loan is far more likely than an ordinary mortgage to finance an investment property. In 2026, according to the Realtor.com figures in Inman's report, 20% of loans under US$100,000 were for investment properties, against 6.3% of all mortgages. That is about three times the usual share.
Primary residences still dominate, but less heavily: 76% of small loans were for a home the borrower lives in, against 91.3% of all mortgages. The gap is 13.7 percentage points on the investment side and 15.3 points on the primary-residence side.
| Purpose of the loan | Loans under US$100,000 | All mortgages |
|---|---|---|
| Investment property | 20% | 6.3% |
| Primary residence | 76% | 91.3% |
Realtor.com analysis, as reported by Inman on 7 October 2026. The two purposes shown do not add up to 100%; the report gives no figure for other purposes.
The report adds two details about these borrowers. Investors put down 34.4%, against 14.6% for the typical buyer, so the investor arrives with more than twice the usual down payment. The report also sets average FICO scores of 737 and 736 side by side, a gap of a single point. The gap in down payments, by contrast, is 19.8 percentage points.
Related readSingapore home loans: LTV, TDSR and MSR limits, HDB loan or bank loanRealtor.com draws a conclusion from this that is worth setting beside the aims of the pilot. In its view, as Inman relays it, encouraging more small mortgages is likely to increase fix-and-flip activity among lower-priced listings, meaning purchases made to renovate and resell. A programme that makes small loans cheaper or easier to obtain would be open to the borrowers who already use them most, and one in five of those is an investor.
Whether the pilot would treat investment loans and owner-occupier loans alike is not known. Inman's list of what Section 105 allows does not mention any distinction between the two, and the design of the programme is still to come.
The appraisal and pay rules elsewhere in the Act
Section 105 is one part of a wider law. Inman reports that Sections 401 to 403 of the same Act reach several other agencies: the CFPB, the USDA, the VA, the FHA and the FHFA.
Two subjects are named in that part of the report. The first is the CFPB's rules on loan originator compensation, which govern how the people who arrange mortgages are paid. The second concerns the FHFA and standards for requests for a reconsideration of value or a second appraisal.
Both subjects sit close to the small-loan question. How an originator is paid shapes which loans are worth an originator's time, and the appraisal is one of the costs Section 105 would allow HUD to cover with a grant. Inman's report does not set out what Sections 401 to 403 require in detail, so their practical effect on small loans cannot be stated here.
The debate that continues in Congress
The Act is not the end of the discussion. Inman quotes Representative French Hill, a Republican from Arkansas, on housing supply and housing finance, and reports that lawmakers are considering changes to Dodd-Frank and to Basel III. No bill, text or date for those changes is given in the report.
Beyond the two deadlines in Section 105, the pilot itself is still open: whether HUD uses the power, which of the tools it chooses, how much money goes behind them, and which lenders and borrowers qualify. Those answers are due from the department, not from Congress, and the first date that bears on them is the July 2027 deadline for establishing the programme.
Kooky, from Shaka
Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
