The COVID-19 pandemic led to a significant decrease in mortgage interest rates, with some rates dropping as low as 2.5%. However, in recent years, these rates have increased substantially, reaching highs of nearly 8% in 2023, with the national average 30-year fixed mortgage APR remaining at 6.84% as of April 1.

This rapid change has resulted in many potential homebuyers being excluded from the market. Nevertheless, there is a potential solution: assumable mortgages. An assumable mortgage is a type of loan that can be transferred to the buyer, allowing them to take over the existing mortgage terms, including the interest rate.

Roam, a New York-based startup, has made it its mission to provide access to thousands of homes with assumable mortgages across the country. Founded by CEO Raunaq Singh in September 2023, Roam has already facilitated $200 million worth of home sales for several hundred buyers in 2024, with over 200,000 buyers registering on its platform in the last 12 months.

According to Singh, assumable loans can help buyers save up to 50% on their monthly payments compared to purchasing a home with current mortgage rates. To make this possible, Roam has developed a product that enables buyers to bring as little as 5% down payment, resulting in a blended rate of 5% or less.

For example, if a home has a sales price of $420,000, with the seller having a 2.25% rate and $135,293 of equity, the buyer can bring 20% down payment, which is $84,000, and receive gap financing for the remaining $51,000 to get a blended rate of 3.45%. This can lead to significant savings for the buyer, with the potential to save hundreds of thousands of dollars.

Currently, Roam operates in 17 states, including Arizona, California, Florida, Texas, and North Carolina, with plans to expand nationwide by the end of the year. Singh expects that Roam will facilitate $1 billion worth of home sales through its platform in 2025.

Keith Rabois, managing director at Khosla Ventures, who led Roam’s new $11.5 million Series A financing, believes that the startup is the “future of the housing market.” Rabois notes that there is an affordable housing crisis in America and that Roam is well-positioned to address it.

Rabois, who is joining Roam’s board as part of the Series A round, has previously worked with Singh and other members of Roam’s team during Singh’s time at Opendoor, a proptech company that Rabois co-founded. Rabois believes that Roam can save 30% of Americans more than $200,000 over the life of their loan.

In addition to Khosla Ventures, existing backer Founders Fund also participated in Roam’s Series A round. The round was completed in just one week, with Singh noting that the company had a pitch meeting on Monday, a term sheet in hand on Tuesday, and had signed the deal by Friday.

Since its inception, Roam has raised a total of about $16 million across three rounds. The latest round represents a significant increase in funding, with Rabois tripling down on his investment. In September 2023, Roam raised $1.25 million in a pre-seed round led by Rabois, and in May 2024, it raised a $3 million seed round, also led by Rabois.

How it works

Historically, finding assumable mortgages was a challenging task, with few sellers or listing agents aware of the existence of such mortgages. However, with Roam, buyers can now find over 2,000 assumable mortgages in cities like Houston listed for sale.

Roam streamlines the process of becoming a homeowner, reducing the time it takes to close an assumable mortgage from 180 days to 45 days. The company also provides pre-approval to buyers before submitting an offer, which has increased the acceptance rate of offers made by Roam buyers.

If Roam is unable to close a deal within 45 days, it will pay the seller’s mortgage until the deal is closed. The company also ensures that all sellers are released from liability, and any subsequent payments made or not made by the buyer will not impact the seller’s credit.

Presently, Roam has 12 employees and has aimed to keep its headcount growth non-linear, with staff increasing by about 2.5x year-over-year compared to revenue growth of about 5x year-over-year. Singh believes that the product allows for revenue growth without linearly increasing variable costs.

The opportunity for Roam is substantial, with $1.4 trillion of fully assumable FHA/VA mortgages originated in 2020 and 2021. According to Singh, one in three homes that were originated or refinanced during those low-rate years were eligible for the opportunity.