Better cuts costs, expands HELOC push amid mortgage market volatility

Executives at Better.com said the conflict in Iran is causing some borrowers to delay closing on mortgages, prompting the company to lean more heavily on home equity lines of credit (HELOCs) to sustain origination volume.

At the same time, the New York-based digital mortgage lender continues to cut costs in an effort to meet its goal of reaching profitability by the end of the third quarter, even as it continues to report EBITDA and net losses.

Parent company Better Home & Finance Holding Co. posted a first-quarter 2026 net loss of $70 million, compared to a $51 million loss in the first quarter of 2025, a 39% increase. Its adjusted EBITDA loss narrowed to $19 million, about half of the $36 million loss it posted in the same period last year.

The lender grew Q1 2026 loan volume by 89% year over year to approximately $1.64 billion, with half of originations flowing through its Tinman AI platform. 

By product, refinance volume reached $854 million in Q1 (52% share; +542% year over year), compared to $588 million for purchase loans (36%; +2% year over year) and $203 million for HELOCs (12%; +30% year over year).

CEO and founder Vishal Garg said the company entered 2026 with “strong momentum,” but amid the prolonged conflict in the Middle East, mortgage rates for consumers on the company’s platform rose from 5.75% to well above 6.5% over the past few weeks.

“This is causing consumers to get stuck in the middle of the funnel, hesitating to lock in at a higher rate, particularly if they feel the rate increase is temporary due to the situation in the Middle East,” Garg said.

“With our partners’ help, we are converting some of these customers who need cash now to HELOCs, but for those looking just for savings per month, we are in a waiting pattern where we will go back to them with a lock as soon as rates come back down.”

HELOCs carry lower loan balances than refinances, but they generate higher gain-on-sale margins, Garg said. Gain-on-sale margins for HELOCs average 6% to 7%, compared to 2.5% for direct-to-consumer loans and 3.5% for originations through partner NEO Home Loans.

The macroeconomic environment is also affecting the company’s Q2 2026 guidance. Better projected loan volume of $1.575 billion to $1.725 billion from April through June, reflecting slower growth than previously expected, and total net revenue was estimated at $53 million to $56 million.

The company guided to an adjusted EBITDA loss of $12.5 million to $14 million for the second quarter and reaffirmed its target of reaching adjusted EBITDA breakeven by the end of Q3 2026.

“The timing for reaching that level will depend in part on the macro environment, and the pace of rate normalization, but the operating model continues to move in the right direction,” Loveen Advani, Better’s chief financial officer, told analysts.

Better has continued work to improve its financial position through measures like a $69 million underwritten public offering, $25 million in planned annualized cost reductions, an increase in warehouse capacity to $850 million and an active sale process for its U.K.-based bank.

The company ended Q1 2026 with approximately $136 million in cash and cash equivalents, restricted cash and net assets held for sale.