New York-based startup Roam has raised $11.5 million in Series A funding to democratize access to assumable mortgages, a move that could help address the housing affordability crisis in the US. The round was led by Khosla Ventures, with participation from existing backer Founders Fund, and values the company at an undisclosed amount.

The startup, founded by Raunaq Singh in September 2023, provides a platform that allows buyers to assume outstanding mortgages from sellers, potentially saving them up to 50% on their monthly payments compared to current mortgage rates. This comes at a time when mortgage interest rates have soared to highs nearing 8% in 2023, making it difficult for many people to buy homes.

Roam's platform 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. The company charges each buyer 1% of the purchase price, which translates to $2 million in revenue in 2024. Roam operates in 17 states, including Arizona, California, Florida, Texas, and North Carolina, and plans to be nationwide by the end of the year.

Singh claims that Roam's platform can save buyers hundreds of thousands of dollars by allowing them to assume mortgages with lower interest rates. For example, if a seller has a 2.25% rate and $135,293 of equity, the buyer can bring 20% down payment and get gap financing for the remaining amount to receive a blended rate of 3.45%. This can be particularly beneficial for first-time homebuyers who may not have the means to afford high monthly payments.

Keith Rabois, managing director at Khosla Ventures, who led Roam's Series A financing, believes that the startup is the "future of the housing market." Rabois, who is joining Roam's board as part of the Series A round, notes that Roam is the "best-positioned company to address" the affordable housing crisis in America. Eric Wu, co-founder of Opendoor, is also an angel investor in Roam and is joining its board as part of the Series A.

Rabois' enthusiasm for Roam is not surprising, given his experience with the startup's team. Singh worked in product for three years at Opendoor, which Rabois co-founded with Eric Wu in 2014. Rabois led Roam's pre-seed round in September 2023 and its seed round in May 2024, and has now tripled down on his investment with the Series A round.

Roam's platform has already shown promising results, with buyers able to find over 2,000 assumable mortgages in Houston alone listed for sale today. The company claims that its platform speeds up the process of becoming a homeowner, reducing the time it takes to close an assumable mortgage from 180 days to 45 days. If Roam doesn't close in 45 days, it'll pay a seller's mortgage until it does.

The company has also taken steps to ensure all sellers are released from liability, and any subsequent payments the buyer makes or doesn't make will not impact the seller's credit. With 12 employees, Roam has aimed to not grow headcount linearly, with staff increasing about 2.5x year-over-year compared to revenue increasing by about 5x year over year.

Singh believes that the opportunity for Roam is vast, citing documents from the Consumer Financial Protection Bureau (CFPB) that show $1.4 trillion of fully assumable FHA/VA mortgages originated in 2020 and 2021. With Roam's platform, buyers can tap into this market, potentially saving themselves hundreds of thousands of dollars in the process.

As the housing affordability crisis continues to affect millions of Americans, Roam's platform could be a game-changer. With its Series A funding, the company is well-positioned to expand its platform and make a meaningful impact on the housing market. As Rabois notes, Roam has the potential to "mitigate the housing affordability crisis by reducing buyers' monthly payments and bringing sellers with low-rate mortgages on the market."