Discussion Paper

Small-Dollar Mortgages for Single-Family Residential Properties

Abstract: There is a significant lack of financing available for low-cost homes, which many first-time homebuyers and low- and middle-income families rely on to move from renting to homeownership. This brief examines the availability of small-dollar mortgages (up to $70,000) for home purchases, refinances, and improvements, presenting a wealth of information on borrower and loan characteristics, production channels, and the geographic distribution of low-cost homes. We find that there is limited mortgage availability for the small loans needed to support the significant number of low-cost property sales and determine that low-cost properties could be a larger source of affordable housing if credit access for purchasing and rehabilitating these properties was expanded and improved.

Keywords: Homebuyers; Homeownership; Low Income; Middle Income; Mortgages;

JEL Classification: G21; R31;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Policy Discussion Paper Series

Publication Date: 2018-04-01