How did Americans manage to buy a home before mortgage loans were available? If buying outright meant paying the full price, it seems likely that many couldn’t afford homeownership and thus ended up renting. Was renting the only option for those without enough money to cover the entire cost of a house?
In researching and reflecting on historical home financing, it appears that early American buyers often had to negotiate directly with sellers to create personal installment agreements. These transactions usually mandated a substantial down payment followed by periodic payments over time, rather than obtaining loans from institutions. The absence of a formal mortgage industry meant that such arrangements were based on trust and the personal credit of the buyer. For those lacking sufficient funds or a trustworthy financial profile, renting indeed remained the more realistic and common option.