HomeLight released its Lender Insights & Predictions report for the second quarter on March 25, emphasizing the rising popularity of non-traditional housing options and increasing foreclosure activity.

The survey was conducted between Feb. 19 and 26 through an online poll of loan officers from 78 top lending companies.

 “The opportunity of access to home equity versus the sting of losing a historically low interest rate seems to have finally reached the tipping point that favors consumers moving forward with renewed hope and plans,” said Jeri Crespn, a Louisiana loan officer with 40 years of experience.

The loan officers surveyed reported that 33 percent of all borrowers are asking about down payment assistance (DPA) or lower down payment programs, while 44 percent of lenders said they were often asked or very frequently asked about 0 percent-down mortgages.

According to the loan officers, a typical down payment for most homebuyers is 14 percent. Nearly a quarter of lenders reported seeing an increase in buyers putting down 5 percent to 10 percent, with a fifth of lenders seeing more of their clients putting down less than 5 percent.

Non-traditional homes are becoming more mainstream, the report stated. More than half (56 percent) of lenders surveyed said that manufactured and mobile homes are the top choices for buyers seeking non-traditional options. Non-traditional homes can also include accessory dwelling units (ADUs) such as backyard cottages (15 percent), tiny homes (3 percent), structure conversions like “barndominiums” (2 percent) and shipping containers (1 percent).

According to the loan officers, borrowers in the South (43 percent) and West (31 percent) were most interested in financing alternative homes, with first-time homebuyers (56 percent) as the top borrower group showing interest.

Twenty-one percent of loan officers reported that they saw an increase in foreclosure rates, which supports the latest data from ATTOM, which showed continued year-over-year increases.

“Foreclosure activity in January rose year-over-year for the 11th straight month, continuing a trend that has now carried into early 2026," ATTOM CEO Rob Barber said. “Foreclosure starts were up 26 percent from a year ago, while completed foreclosures increased nearly 59 percent. … [O]verall levels remain well below historic peaks, suggesting that most homeowners are still on stable footing even as higher housing costs and broader economic pressures create stress in certain pockets of the market.”

The loan officers surveyed reported that most foreclosures were occurring in the South (46 percent) and West (29 percent), with homeowners aged 35-44 having the highest foreclosure rate (42 percent). Forty-two percent of loan offices predicted an increase in foreclosures in 2026.

When asked about the biggest frustrations with the 2026 housing market, loan officers reported that affordability challenges, economic uncertainty affecting borrower confidence and buyers’ hesitance to give up low existing mortgage rates were the top three frustrations.

The report also noted that the “buy first” strategy was “gaining momentum.” Fourteen percent of lenders said they were often or very frequently asked about buy-before-you-sell programs, with another 40 percent reporting they occasionally fielded inquiries about this option.

 “Tapping into equity funds also allows a homeowner-buyer to make a stronger, non-contingent offer on their next property and make only one move, avoiding storage units, temporary housing and the stress of timing their home sale just right,” the report stated,

Fifty-three percent of loan officers surveyed reported that home equity line of credit (HELOC) was the most common way homeowners were gaining access to their equity, followed by cash-out refinance (17 percent), home equity loans (14 percent) and buy-before-you sell programs (12 percent).

The loan officers also reported that, on average, a home mortgage loan takes 26 days, a home equity loan takes 22 days and HELOC approval takes 10 days.

The report noted that while some homeowners are utilizing HELOCs or buy-before-you-sell programs to purchase without contingencies, others still feel “locked in” by their historically low mortgage rates.

Overall, “loan officers say equity is providing new flexibility, but today’s rate environment still requires careful planning. Yet many potential buyers — with and without equity — are still holding back, often because of misconceptions about rates, affordability and down payments,” the report said.

The top five false or misleading beliefs that lenders said are holding buyers back from making a move include the following:

• Rates will drop back to 3 percent to 4 percent: “Many buyers think it’s better to wait for the rates to come down to try to purchase,” Megan Kelly, a California loan officer, said. “However, it’s smarter to purchase now and likely get a better deal on the house price and/or receive seller concessions for the closing costs. Then, when the market improves, they can refinance to a lower rate.”
• Waiting will make homes more affordable: “Many buyers think waiting to purchase is a good thing,” James Branson, a Missouri loan officer, said. “But waiting is costing most consumers a lot of money. Just doing some research from 2024 to 2026, and the property value has gone up 10 percent, and rates are similar or slightly lower. The cost of waiting has been far higher than consumers realize.”
• A 20 percent down payment is required for purchase: “The biggest misconception buyers have in today’s market is still assuming they need a 20 percent down payment. They also tend to assume their own loan qualifications and get discouraged before speaking to a mortgage professional,” Brit Alexander, a Colorado loan officer, said.
• Rates are historically high or unusually unaffordable: “Buyers and sellers often think they can time the market. There isn’t a magical day in which you will win, and another loses,” Pete McGhee, an Indiana loan officer, said. “The best you can do is play the game to the best of your ability when it is your time to play.”
• Homeownership is not financially possible at present: “So many people assume homeownership is out of reach before they ever have a real conversation about their numbers. Yes, there are more factors to consider in today’s market, but when we actually break it down and compare their current rent to what a mortgage payment could look like, the gap is often not what they expected,” Ashlee Sheppard, a Georgia loan officer, said.

Lastly, when asked to name the most exciting things about the 2026 housing market, the top three responses from loan officers were: stabilizing or moderating mortgage rates; increasing buyer activity or renewed demand; and signs of improving housing inventory.

For more stories on this topic, visit our sister publication The Title Report’s Housing Inventory & Attainability Watch library.