Keith Rabois of Khosla leads a $11.5 million funding round for the startup Roam, which he describes as 'the future of the housing market.'

During the COVID-19 pandemic, mortgage interest rates reached historically low levels, dropping to as low as 2.5%. However, a few years later, these rates skyrocketed, reaching nearly 8% in 2023, with a national average APR for a 30-year fixed mortgage at 6.84% as of April 1. This fluctuation has left many potential homebuyers excluded from the market. Nevertheless, there is an option that could allow them to take advantage of the interest rates from previous years: assumable mortgages.

An assumable mortgage allows an outstanding loan to be transferred to the buyer. This is where Roam comes in, a New York-based startup that aims to facilitate access to "thousands" of homes with assumable mortgages across the country. Raunaq Singh, the CEO of Roam, who had worked in product for three years at Opendoor, founded the company in September 2023. Roam has facilitated home sales worth 200 million dollars for "several hundred" buyers in 2024, and more than 200,000 buyers have registered on its platform in the past year.

Although Singh did not provide specific revenue figures, he mentioned that Roam charges each buyer 1% of the purchase price. Therefore, 1% of 200 million dollars would amount to 2 million dollars in revenue for Roam in 2024. According to Singh, assumable mortgages can save buyers up to 50% on their monthly payments compared to purchasing at current mortgage rates. Singh points out that the seller's accumulated equity must be disbursed and states that Roam has developed a product that allows buyers to contribute as little as 5% to secure an average rate of 5% or less.

For example, in the case of a home with a sale price of 420,000 dollars, with a seller's rate of 2.25% and 135,293 dollars in equity, the buyer does not need to provide the total amount as a down payment. "You can contribute 20%, which is 84,000 dollars, and obtain complementary financing for the remaining 51,000 dollars, thus achieving an average rate of 3.45% and saving hundreds of thousands of dollars," Singh highlighted. "As long as you qualify for an FHA or VA loan, you will be able to assume a mortgage with Roam. If you cannot qualify for a home on Roam, it is unlikely that you will be able to buy a home at all."

Currently, the startup operates in 17 states, including Arizona, California, Florida, Texas, and North Carolina, and plans to expand nationwide by the end of the year, with expectations to facilitate home sales worth 1 billion dollars through its platform by 2025. This ambition has been backed by Keith Rabois, the general partner at Khosla Ventures, who led Roam’s new Series A funding round of 11.5 million dollars, and considers this startup to represent the "future of the housing market."

Rabois, who will join Roam's board as part of this round, expressed his confidence in the team's ability to address the housing affordability crisis by reducing buyers' monthly payments and encouraging sellers with low-interest mortgages to enter the market. "While most companies that help consumers save allow them to save a few hundred dollars a year, Roam can help 30% of Americans save more than 200,000 dollars over the life of their loan," he added.

In addition to Rabois, other prominent investors also participated in the recent funding round, which was finalized just a week after Roam began the fundraising process. Since its inception, Roam has raised a total of approximately 16 million dollars across three rounds. In September 2023, prior to this round, Roam had raised 1.25 million dollars in a pre-seed round and later 3 million dollars in a seed round.

Historically, according to Singh, when looking for assumable mortgages on platforms like Zillow, buyers would find few or no results. This is because very few sellers or listing agents are aware that they have an assumable mortgage and do not think to advertise it. However, with Roam, it is claimed that buyers can find over 2,000 assumable mortgages in specific areas, such as Houston. Furthermore, Roam streamlines the process, reducing the typical closing time for an assumable mortgage from 180 days to 45 days. If Roam fails to close the mortgage within this timeframe, the company commits to covering the seller's mortgage payment until it is completed.

Since its launch, Roam has 12 employees and has worked to maintain balanced growth, increasing staff at a rate of 2.5x annually, while revenue has grown approximately 5x in the same period. Singh states that there is a significant opportunity in the market, citing that 1.4 trillion dollars in FHA/VA assumable mortgages were originated in 2020 and 2021, and that one-third of the homes financed in those years of low rates were eligible for such opportunities.