Small mortgages are harder to find partly because lenders face many of the same processing and servicing costs on a small loan as on a much larger one, but earn less from the smaller balance. The number of mortgages below $150,000 fell from 2.7 million in 2004 to 830,000 in 2021, according to HUD’s Winter 2026 article. That is a decline in loan counts—not proof that the number of affordable homes fell by the same amount.
What counts as a small mortgage?
There is no single cutoff across the available HUD figures. HUD’s 2022 study examined original loan amounts of $70,000 or less. Its Winter 2026 article uses a broader definition: mortgages below $150,000. The figures describe different segments and periods, so they should not be combined into one trend line.
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In HUD’s narrower study, loans of $70,000 or less made up less than 3.5% of home-purchase originations in 2020. That shows how uncommon these loans were within that year’s purchase market; it does not mean that fewer than 3.5% of homes were affordable.
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Fixed costs weigh more heavily on a small balance
Mortgage origination and servicing involve work and expense that do not necessarily fall in proportion to the amount borrowed. If the loan balance is small, the lender may receive less revenue while still incurring many of the same costs. HUD identifies this mismatch as a significant barrier to making small-dollar loans.
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This helps explain why a property’s low price does not guarantee a buyer can find a mortgage for it. A lender may be reluctant to originate a loan when expected revenue does not cover the costs, even if the borrower and property otherwise appear financeable. The economics are one factor, not a complete explanation of every lender’s decision.
Other factors may contribute
HUD says rising housing prices help explain the scarcity of small loans, but do not explain it entirely. The agency also cites research suggesting loans for lower-priced homes may have higher delinquency. That finding is a possible consideration in the market; it does not establish that delinquency causes lenders to avoid small loans or that every lower-priced-home loan is riskier.
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What the decline in small-loan counts does—and does not—show
For mortgages below $150,000, HUD’s Winter 2026 article reports a fall from 2.7 million in 2004 to 830,000 in 2021, a decline of nearly 70%. The threshold is below $150,000 in both years, making this a like-for-like comparison of loan counts across that period.
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Loan counts are not a direct measure of affordable-home inventory. They show how many mortgages in the defined balance range were made, not how many lower-priced properties existed, were listed, or could be bought without a mortgage. The available figures do not provide one unified, current measure of whether the affordable housing market as a whole is shrinking.
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Broader mortgage conditions add context but should not be mistaken for small-loan statistics. The Consumer Financial Protection Bureau reported that mortgage applications fell 30% and originations fell 32% in 2023 compared with 2022. It also reported that the average monthly principal-and-interest payment for a conventional conforming 30-year fixed loan rose from $2,045 in December 2022 to $2,295 in December 2023. Those market-wide measures do not isolate lower-balance loans or establish an affordable-home inventory trend.
Does FHA have a minimum loan amount?
No. HUD says FHA programs do not impose a minimum loan amount, and FHA insures a disproportionate share of loans for lower-priced homes compared with the broader mortgage market. HUD also cautions that FHA alone cannot resolve the availability problem: lenders’ decisions about submitting loans, as well as policy, shape the mix of loans FHA insures.
HUD identifies FHA property-improvement and manufactured-home programs as potentially relevant to lower loan amounts. They are not universal financing for any inexpensive property; eligibility depends on the specific program, property, and borrower circumstances.
What other financing might buyers encounter?
HUD’s Winter 2026 article describes several alternatives used by some rural buyers. They are distinct arrangements, not interchangeable forms of a conventional mortgage.
- Personal-property loans: Financing tied to a home treated as personal property rather than real estate.
- Land contracts: An arrangement in which a buyer makes payments to a seller under a contract to purchase land or a home.
- Lease-to-purchase agreements: A lease arrangement that may include an option or path to buy.
- Seller-financed mortgages: Financing provided by the property seller rather than a conventional mortgage lender.
HUD notes these alternatives may carry higher costs and risks. Their terms and protections depend on the arrangement, so a buyer should not assume they offer the same conditions or safeguards as a conventional mortgage.
Quick Recap
What buyers can take away
- A low purchase price does not ensure that a mortgage will be available; small-balance lender economics can be a hurdle.
- “Small mortgage” depends on the source and threshold. HUD’s $70,000-or-less and below-$150,000 figures describe different loan groups.
- FHA has no minimum loan amount, but that does not guarantee a lender will offer a particular small loan or that a property qualifies for an FHA program.
- Alternative financing exists in some markets, particularly rural ones, but can bring different costs and risks.
Sources and scope
- HUD’s 2022 findings and release cover the study of loans at or below $70,000, including their share of purchase originations in 2020.
- HUD’s Winter 2026 article reports the below-$150,000 loan-count trend and discusses rural financing alternatives.
- The CFPB’s 2024 announcement describes overall mortgage-market activity and costs in 2023, not small-balance loans specifically.
- The HMDA data portal provides loan-level data for further analysis; no newer small-loan trend is established by the figures cited here.
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