Real Estate

Assumable mortgage platform Roam partners with national lender on down payment assistance

New York-based assumable mortgage platform Roam rolled out a new partnership with national lender Spring EQ to provide second-lien loans to Roam customers, the company announced on Thursday. The new service, Roam Boost, will cater to people with credit scores of at least 640 and down payments of at least 15%. 

Consider, for example, a home that costs $400,000, with an assumable mortgage amount of $280,000. A prospective buyer would still need to come up with $120,000 to close the gap. If the buyer has a 20% down payment, or $80,000, they would still need an additional $40,000 to seal the deal. 

Roam Boost would allow this hypothetical customer to benefit from the assumption of an existing first-lien mortgage at 3% along with a new second-lien mortgage at current market rates, helping them achieve a blended rate in the range of 4% to 5%, according to Roam’s calculations. This would equate to significant savings compared to taking out a new first mortgage at a rate of 7.5%.

By finding a way to bridge the down payment gap, Roam Boost puts the assumable mortgage opportunity within reach of 50% of prospective homebuyers, according to a news release. Assumable mortgages enable qualified buyers to take over a seller’s mortgage terms, including the existing balance and interest rate. 

Mortgages backed by the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) are the most common types of loans that can be assumed. Typically, the fees are lower than those for new loans and no appraisal is needed. An estimated 12.2 million loans, or 23% of active mortgages, are eligible for assumption, according to Intercontinental Exchange.

The number of assumptions being completed is a small but growing fraction of all home sales. There were more than 6,400 completed in 2023, up 139% from 2022, according to a report in The Wall Street Journal. And according to a report published this week by The New York Times, there have been nearly 3,900 completed thus far in 2024.  

“Our mission is to make homeownership 2 times more affordable for 1 million Americans in this decade,” Raunaq Singh, founder and CEO of Roam, said in a statement. “As we continue to expand to new markets, Roam Boost and our partnership with Spring EQ is a key part of bringing that mission to a broader base of potential buyers.” 

Roam has also expanded to three additional markets: Tucson, Arizona; Jacksonville, Florida; and Chicago. Roam now services 35% of homes with FHA and VA loans in the U.S., and the company wants a presence across the entire country by the end of this year, Singh said.

Additionally, the company recently received a $3 million investment led by the venture capital firm Founders Fund. The investors included Tony Xu, chief executive of DoorDash;  Dylan Field, CEO of Figma; and Paul Gu, co-founder of lending platform Upstart, among others.

Roam also added a new guarantee for its customers. If an assumption isn’t processed within 45 days, the company will pay the homeowner’s mortgage on a prorated basis until it is.

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