Roam Raises $11.5M Series A Led by Keith Rabois - Future of Housing

The Rise of Assumable Mortgages and Roam's Innovative Approach

Throughout the COVID-19 pandemic, mortgage interest rates experienced a significant decline, reaching as low as 2.5%.

However, in subsequent years, these rates dramatically increased, peaking near 8% in 2023. As of April 1st, the average 30-year fixed mortgage APR remained at 6.84%.

This rapid shift has created challenges for many prospective homebuyers, effectively pricing some out of the market.

Introducing Assumable Mortgages

An alternative solution lies in assumable mortgages, which allow buyers to take over an existing loan with its current interest rate.

Roam, a New York-based startup, is focused on expanding access to homes with these advantageous mortgages nationwide.

Roam's Growth and Impact

Founded in September 2023 by Raunaq Singh, formerly a product manager at Opendoor, Roam has quickly gained traction.

In 2024 alone, the company facilitated approximately $200 million in home sales for hundreds of buyers.

Over the past year, more than 200,000 potential buyers have registered on the Roam platform.

Roam generates revenue by charging buyers 1% of the purchase price. Based on the $200 million in sales, this equates to $2 million in revenue for the company in 2024.

Significant Savings for Buyers

Singh asserts that utilizing assumable loans can result in savings of up to 50% on monthly mortgage payments compared to securing new financing at prevailing rates.

While sellers will need to realize the equity in their homes, Roam provides tools to streamline this process.

The platform enables buyers to make down payments as low as 5%, potentially securing a blended interest rate of 5% or less.

A Practical Example

Consider a home priced at $420,000 with a seller holding a 2.25% rate and $135,293 in equity.

A buyer could contribute a 20% down payment ($84,000) and obtain gap financing for the remaining $51,000, resulting in a blended rate of 3.45%.

This approach could save the buyer hundreds of thousands of dollars over the life of the loan.

According to Singh, qualification for an assumable mortgage through Roam generally aligns with the requirements for FHA or VA loans.

Expanding Reach and Future Projections

Currently, Roam operates in 17 states, including Arizona, California, Florida, Texas, and North Carolina.

The company plans to expand its services nationwide by the end of the year.

Roam anticipates facilitating $1 billion in home sales through its platform in 2025.

Industry Recognition and Investment

Keith Rabois, managing director at Khosla Ventures, believes Roam represents the “future of the housing market” and led the company’s $11.5 million Series A funding round.

Rabois highlighted Roam’s potential to address the affordable housing crisis in America.

He previously collaborated with Singh and other Roam team members at Opendoor, a proptech company he co-founded in 2014.

Eric Wu, also a co-founder of Opendoor, is an angel investor in Roam and will also join the board.

Rabois emphasized Roam’s ability to significantly reduce monthly payments and bring low-rate mortgages to the market, potentially saving Americans over $200,000 over the life of their loans.

Recent Funding Rounds

Founders Fund also participated in Roam’s Series A round, which was completed remarkably quickly – from pitch meeting to signing in just one week.

To date, Roam has raised approximately $16 million across three funding rounds.

Rabois initially invested $1.25 million in a pre-seed round in September 2023, while at Founders Fund.

In May 2024, Roam secured a $3 million seed round, again led by Rabois. Investors in this round included Tony Xu, Dylan Field, and Paul Gu.

The company has not disclosed its current valuation.

Understanding the Roam Platform

Previously, as Singh points out, individuals searching for assumable mortgages on platforms like Zillow, particularly in cities such as Houston, often encountered limited or no relevant listings.

He explains that a significant reason for this scarcity is a lack of awareness among sellers and listing agents regarding the assumability of their mortgages, leading to a failure to advertise this feature. Roam, however, aims to change this, with Singh asserting that buyers can now discover over 2,000 assumable mortgages currently available in Houston alone.

Even when buyers are cognizant of a seller possessing an assumable loan, securing approval for the assumption traditionally could require as long as 45 days, according to Singh.

This lengthy approval process often resulted in deals falling through, creating difficulties for sellers who then had to relist their properties. Consequently, listing agents became hesitant to accept offers contingent on assumable mortgages. Roam addresses this issue by enabling buyers to obtain pre-approval prior to submitting an offer, substantially boosting the likelihood of offer acceptance by sellers.

Streamlining the Homeownership Process

Singh further contends that Roam accelerates the overall timeline for becoming a homeowner.

He states that closing on an assumable mortgage typically takes 180 days, but with Roam, this timeframe is reduced to just 45 days. Furthermore, the company provides a guarantee: if a closing isn't completed within 45 days, Roam will cover the seller’s mortgage payments until it is finalized.

The platform also prioritizes protecting sellers from liability, ensuring that any subsequent payments, or lack thereof, made by the buyer will not negatively affect the seller’s credit score.

Company Growth and Market Opportunity

Currently, Roam operates with a team of 12 employees. Singh highlights the company’s strategy of prioritizing revenue growth over linear headcount expansion, with staff increasing at a rate of 2.5x year-over-year compared to a 5x year-over-year revenue increase.

“Our product model facilitates revenue expansion without a proportional increase in variable costs,” he explained to TechCrunch.

Singh believes a substantial market opportunity exists.

He cites data from the Consumer Financial Protection Bureau (CFPB), stating that "$1.4 trillion in fully assumable FHA/VA mortgages were originated in 2020 and 2021." He adds that approximately one in three homes originated or refinanced during those periods with low interest rates qualified for assumability.

• Assumable Mortgages: Loans that allow a buyer to take over the seller’s existing mortgage.
• FHA/VA Loans: Mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, often assumable.