During the COVID-19 pandemic, mortgage interest rates reached unprecedented lows, dropping to as low as 2.5%. However, in the years following, these rates increased significantly, reaching nearly 8% by 2023. As of April 1, the national average for a 30-year fixed mortgage APR stood at 6.84%, creating challenges for potential homebuyers entering the market.
Amidst this dramatic shift, assumable mortgages present a potential solution. These mortgages allow the outstanding loan to be transferred from the seller to the buyer, effectively enabling access to lower interest rates from past years.
Roam, a startup based in New York, aims to capitalize on this opportunity by offering access to thousands of homes with assumable mortgages across the United States. The company, founded by CEO Raunaq Singh in September 2023, has facilitated the sale of homes worth $200 million to several hundred buyers in 2024. To date, over 200,000 buyers have registered on Roam’s platform. Although Singh did not disclose specific revenue figures, he mentioned that Roam charges a 1% fee of the purchase price, translating to $2 million in revenue from the $200 million in home sales.
Singh claims that assumable loans can substantially reduce buyers’ monthly payments, potentially saving up to 50% compared to current mortgage rates. While acknowledging that sellers’ equity must be cashed out, Singh noted that Roam offers options allowing buyers to bring as little as 5% down, enabling a blended interest rate of 5% or lower.
For instance, Singh illustrated that for a home priced at $420,000, with the seller having a 2.25% rate and $135,293 in equity, buyers are not required to pay the entire amount upfront. Instead, by bringing 20% ($84,000) and acquiring gap financing for the remaining $51,000, buyers could achieve a blended rate of 3.45% and save significantly over time. Singh stated that those who qualify for an FHA or VA loan would also qualify to assume a mortgage with Roam.
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 anticipates that Roam will facilitate $1 billion in home sales through its platform by 2025. Leading a recent $11.5 million Series A financing round, Keith Rabois, managing director at Khosla Ventures, expressed confidence in Roam’s potential, highlighting the startup’s capacity to address America’s affordable housing crisis.
Rabois, who will join Roam’s board, has a previous connection with Singh from the latter’s tenure at Opendoor, which Rabois co-founded. He emphasized Roam’s potential in significantly reducing buyers’ monthly payments, which could collectively save 30% of Americans more than $200,000 over their loan life. The Series A round also involved Founders Fund, an existing investor, and was completed swiftly within a week of initial discussions.
Since its founding, Roam has raised approximately $16 million over three funding rounds. In September 2023, the company secured $1.25 million in a pre-seed round led by Rabois at Founders Fund. This was followed by a $3 million seed round in May 2024, again led by Rabois and involving investors such as DoorDash founder Tony Xu and Figma founder Dylan Field.
In terms of operations, Singh noted that traditionally, buyers searching for assumable mortgages— such as in Houston—could find limited results. Roam aims to change this by listing over 2,000 assumable mortgages available for sale in Houston. Roam also accelerates the mortgage assumption process; while it typically takes 180 days to close without Roam, the company reduces this to 45 days. If Roam fails to meet this 45-day timeline, the company commits to covering the seller’s mortgage until the closing is completed.
Roam currently employs 12 people and seeks not to grow its workforce linearly, with staff growth approximately 2.5 times year-over-year, compared to a revenue growth of about 5 times. Singh indicated that the market opportunity is substantial, citing $1.4 trillion in fully assumable FHA/VA mortgages originated in 2020 and 2021, according to data from the Consumer Financial Protection Bureau.
