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May 28: 💰 The Forgotten Funds
Leveraging untapped down payment programs and I-bonds to combat a 3.8% inflation economy.
Alex Veytsman
May 28, 2026
🏡 The Lending Letter
Thursday, May 28, 2026 — PCE Day Delivered. Here's What It Means for Your Mortgage Rate 📊
The Down Payment Assistance Programs Most Buyers Never Even Ask About 💰 | Why I-Bonds Just Got a Lot More Interesting at 3.8% Inflation 📈
Good morning and happy Thursday! ☕ Welcome back from Memorial Day weekend — hope the burgers were worth it and that you're ready for what turned out to be a genuinely data-heavy morning. Rates are sitting at 6.59% today, down just two basis points from Wednesday's 6.61%. Small move. But the data behind it? Big story. 📉
Today's 8:30am ET data dump was everything the bond market had been bracing for all week: April PCE inflation (the Fed's favorite gauge), the Q1 GDP second estimate, and weekly jobless claims — all at once. The headline PCE came in at 3.8% year-over-year, matching expectations, but the monthly print of +0.4% was actually softer than the feared +0.5%. Core PCE (stripping out food and energy) clocked in at 3.3% annually — again right on forecast but with a softer monthly read of +0.2% vs. the +0.3% expected. Bonds yawned slightly in relief. 😮💨
Then came the GDP gut-check: Q1 growth was revised down to 1.6% annualized from the initial 2.0% estimate — and while "slower growth" sounds bad, in bond market terms that's a gentle nudge toward "maybe the Fed can cut sooner." Jobless claims came in at 215,000 — slightly above the 211,000 consensus, another mild softening signal. We'll unpack all of it below. 👇
Two deep dives today that are genuinely timely: Down Payment Assistance programs — the federally and state-backed money that millions of first-time buyers never think to ask for — and I-Bonds, the overlooked Treasury security that's looking pretty attractive in a world where the Fed's own inflation gauge is still running at 3.8%. Let's go. 🚀
📊 30-Year Fixed Rate — Thursday, May 28, 2026
6.59%
⬇️ -0.02% from Wednesday, May 27 | Soft PCE monthly read offers slight relief
Source: Mortgage News Daily | Post-Memorial Day data triple-header — PCE, GDP, Claims all landed at 8:30am ET
💡 What 6.59% Costs You Right Now (P&I Only)
$300K loan → ~$1,915/month
$400K loan → ~$2,554/month
$500K loan → ~$3,192/month
$600K loan → ~$3,831/month
🎯 Lender Promos — See What You Qualify For
Rates have pulled back slightly after today's data — and they can move fast in either direction. If you've been thinking about getting a quote, now is a decent window to shop without chasing a moving target:
🏠 Buying or refinancing a primary home? Fill out this quick form to get matched with lenders for your situation. ✅
🏘️ Looking at a rental or investment property? Investment property loans are priced differently — get connected with a specialist here. 📋
📰 MARKET PULSE — PCE LANDED. WHAT NOW?
🔔 PCE, GDP, Claims — The Full Thursday Breakdown
Let's walk through what just printed this morning and what it actually means for the rate outlook heading into June.
| Report | Result | Rate Implication |
|---|---|---|
| PCE (Headline) | 3.8% YoY, +0.4% MoM — in line; monthly came in softer than the feared +0.5% | 🟡 Neutral-to-slightly-friendly. Matched annual forecast but the monthly deceleration matters |
| Core PCE | 3.3% YoY, +0.2% MoM — monthly print below the 0.3% forecast | 🟢 Mild positive for bonds — the underlying monthly trend is slowing |
| Q1 GDP (2nd Estimate) | 1.6% annualized — revised DOWN from the 2.0% advance estimate | 🟢 Slower growth gives the Fed more theoretical room to cut rates |
| Jobless Claims | 215,000 vs. 211,000 expected — slightly above consensus | 🟡 Mild positive — labor market edging softer, but not alarming |
| New Home Sales (April) | 622,000 annualized rate vs. 665,000 expected — down 6.2% from March | 🟢 Weak housing demand could increase pressure on builders to offer concessions |
The big picture read: today's data was soft enough to keep June rate cut hopes breathing, but not so dramatic that bonds staged a big rally. The two-basis-point drop in mortgage rates reflects that nuance. The June 17–18 FOMC meeting is now 20 days away, and every data point between now and then either builds or erodes the case. Today nudged modestly in the "build" direction. 📅
Worth flagging: BEA's PCE report noted that consumer spending rose just 0.1% in real terms in April — meaning that after adjusting for inflation, Americans are barely increasing what they're actually buying. The Iran conflict's oil price shock is squeezing wallets, and CNN's coverage of the report noted that household savings rates have hit their lowest point in nearly four years. Households are coping — but the cushion is thinning. 🛢️
Also landing this morning at 10am ET: April New Home Sales came in at 622,000 — well below the 665,000 expected and the lowest reading in three months. According to Census Bureau data, sales fell sharply in the South (-9.8%) and Midwest (-25%), with only the West posting gains. The silver lining: housing supply rose to 9.4 months, which gives buyers real negotiating leverage — especially for builder concessions like rate buydowns and closing cost assistance. The median new home price landed at $422,500, up 2.2% year-over-year. 🏗️
The afternoon has more: NY Fed President John Williams speaks at 8:55am ET, St. Louis Fed's Alberto Musalem at 10:15am ET, and Richmond Fed's Thomas Barkin closes out at 3pm ET. Three Fed voices in one day — watch for any shift in tone on the June meeting. 🎙️
🗓️ What's Coming: May 28 – June 18
| Date | Event | Why It Matters |
|---|---|---|
| Today ← Thu, May 28 | PCE, GDP, Claims, New Home Sales; Williams/Musalem/Barkin speak | Already landed — data prints slightly soft ✅ |
| Fri, May 29 | Four Fed speakers: Schmid, Bowman, Paulson, Daly | Could clarify June FOMC intentions before the blackout period |
| Fri, Jun 6 | May Jobs Report (8:30am ET) | Labor market check — key input for the June FOMC decision |
| Wed, Jun 11 | May CPI (8:30am ET) | Will tariff inflation show up again? The last big data point before the blackout |
| Jun 17–18 | FOMC Rate Decision | Today's soft data nudges the needle toward a cut — but it's not a lock |
💰 DEEP DIVE #1: DOWN PAYMENT ASSISTANCE
🏠 The $20K That Was Sitting There the Whole Time — DPA Programs Most Buyers Never Ask About
Here's a stat that should frustrate every real estate agent in America: roughly 87% of U.S. homes qualify for some form of Down Payment Assistance, yet surveys consistently show that most first-time buyers have no idea these programs exist. We're talking about money that doesn't have to be repaid — or that gets forgiven after a few years of living in the home. Free money. And people are leaving it on the table because they didn't know to ask. 🤦
Down Payment Assistance (DPA) is an umbrella term for government-backed, nonprofit, and lender programs designed to help buyers cover their down payment and sometimes closing costs. With new home sales at a three-month low and builder inventories sitting at 9.4 months of supply, this is arguably the best leverage buyers have seen in years to stack DPA on top of builder concessions. 🏗️
🔢 The Four Main Types of DPA (And How Each One Works)
Type 2 — Forgivable Loans (Silent Seconds): A second mortgage at 0% that gets "forgiven" after you've lived in the home for a set period (usually 3–10 years). If you sell or refi before the forgiveness period ends, you repay a prorated amount. Often 3–5% of purchase price.
Type 3 — Deferred-Payment Loans: A second mortgage with no monthly payments — the balance comes due only when you sell, refinance, or pay off the first mortgage. Typically at 0% interest. Useful for buyers tight on cash flow but not planning to move soon.
Type 4 — Matched Savings Programs (IDAs): Individual Development Accounts match your savings dollar-for-dollar (sometimes 2:1 or 3:1). You save $5,000, you get $10,000–$15,000. The catch: takes 12–24 months of disciplined savings. Best for buyers 1–2 years out.
📊 National DPA Programs Worth Knowing (Available in Most States)
| Program | Who It's For | What It Offers | Where to Start |
|---|---|---|---|
| HUD-Approved DPA Programs | First-time buyers in most states | Grants, forgivable loans up to 5% of purchase price | HUD's housing counselor locator |
| Fannie Mae HomeReady® | Low-to-moderate income; 3% down with DPA stacking | 3% down payment; allows DPA from approved sources | Fannie Mae's owning a home tool |
| Freddie Mac Home Possible® | Buyers earning ≤80% of area median income | 3% down; DPA-compatible | Freddie Mac's MyHome portal |
| State HFA Programs | Varies — most states have income/price limits | Forgivable seconds; below-market first mortgage rates | NCSHA's state-by-state HFA directory |
💡 Real Example: $400K Home in a Typical Metro (DPA vs. No DPA)
| Scenario | Down Payment | Loan Amount | Monthly P&I | Cash to Close (est.) |
|---|---|---|---|---|
| Standard 5% down, no DPA | $20,000 | $380,000 | ~$2,427 | ~$28,000–$32,000 |
| 3% down + 3% DPA grant/forgivable loan | $12,000 (3%) | $388,000 | ~$2,478 | ~$16,000–$20,000 |
Yes, your monthly payment is slightly higher with a smaller down payment, and you'll carry PMI until you hit 20% equity — but the cash-to-close difference of $12,000+ can be transformative for buyers who have income but limited liquid savings. In a lot of markets, DPA is the difference between buying now and buying three years from now. 🔑
1️⃣ Income limits are real — most programs cap eligibility at 80–120% of Area Median Income (AMI). If you earn above that threshold, many grant programs close. Know your number.
2️⃣ "First-time buyer" often means you haven't owned in 3 years — not that you've never owned. This catches a lot of people who think they don't qualify.
3️⃣ You must use an approved lender — DPA programs don't work with every lender. Ask specifically: "Do you originate loans with [state] Housing Finance Agency DPA?" before you get deep into the process.
📈 PERSONAL FINANCE HACK: I-BONDS
🛡️ I-Bonds in a 3.8% Inflation World — The Treasury Security That Quietly Beats Most Savings Accounts
With today's PCE reading officially confirming that inflation is still running at 3.8%, let's talk about the one savings instrument specifically designed to make sure inflation doesn't eat your cash: Series I Savings Bonds, better known as I-bonds. Not glamorous. Not crypto. Just a rock-solid Treasury product that adjusts its rate every six months to track inflation — and one that most people remember hearing about in 2022 and then completely forgot. 🤷
Here's a quick refresher: an I-bond earns interest based on a combination of a fixed rate (set at purchase, locked in for the life of the bond) and an inflation adjustment (reset every May 1 and November 1, based on CPI-U). When inflation is running hot, I-bonds can offer returns well above high-yield savings accounts. When inflation cools, so does the rate. It's not magic — it's a hedge. 🔐
📋 I-Bond Fast Facts (2026)
Where to buy: Only through TreasuryDirect.gov — no brokerages, no secondary market.
Annual limit: $10,000 per Social Security number per year (electronic). Extra $5,000 using your tax refund (paper bonds).
Minimum hold: 1 year. Redeem before 5 years and you forfeit the last 3 months of interest.
Taxes: Federal income tax only (no state/local). Interest can be deferred until redemption or up to 30 years. If used for qualified education expenses, may be partially or fully tax-exempt.
Current composite rate: Check TreasuryDirect's I-bond rate page for the current rate reset after the latest CPI readings.
💰 I-Bond vs. HYSA vs. 1-Year CD: A Real Comparison
| Product | Est. Yield | Inflation-Adjusted? | Liquidity | Tax Efficiency |
|---|---|---|---|---|
| I-Bond | Tracks inflation (CPI-U based); check current rate at TreasuryDirect | ✅ Yes — by design | Locked 12 months; 3-month penalty if redeemed before 5 yrs | Federal only; deferrable; education exclusion possible |
| High-Yield Savings (HYSA) | Varies; moves with Fed rate — watch if cuts come | ❌ No — rate set by bank, not CPI | Fully liquid; withdraw anytime | Federal + state income tax; no deferral |
| 1-Year CD | Rate locked at purchase; competitive for short-term | ❌ No — fixed rate regardless of CPI | Early withdrawal penalty (varies by bank) | Federal + state income tax in the year earned |
| TIPS (Treasury Inflation-Protected Securities) | Real yield + CPI adjustment; principal adjusts with inflation | ✅ Yes — principal indexed to CPI | Marketable; can sell before maturity | Federal tax on inflation adjustment even if not realized |
🎯 When I-Bonds Actually Make Sense (And When They Don't)
— You have cash earmarked for a goal that's 1–5 years out (emergency fund top-up, future home purchase, education) and you want to preserve real purchasing power
— Inflation is running above what HYSAs or CDs are offering after tax — which is frequently the case right now
— You're in a state with high income tax and want federal-only taxation
— You have kids heading to college and want the potential education exclusion
⚠️ I-bonds don't make sense when:
— You might need the cash in the next 12 months — the 1-year lock is non-negotiable
— You're comparing them to equities for long-term growth — I-bonds aren't equity; they're a cash/inflation hedge
— You want to invest more than $10,000/year here — the annual limit makes them a complement to a broader portfolio, not the center of it
🏖️ STR INVESTOR CORNER
🏖️ STR Corner: The Post-Memorial Day Lull Is Real — Here's How to Beat It
Memorial Day weekend is officially in the rearview. 🎉 If your STR calendar looked like a ticker tape parade last weekend — congrats. Now comes the part no one warns you about: the mid-June gap. The week right after Memorial Day into Father's Day weekend (June 21) is statistically one of the softer stretches of the summer for many STR markets — especially those not near a beach or major event venue. Here's how to navigate the next three and a half weeks. 📅
| Period | Dates | Strategy | Min. Nights |
|---|---|---|---|
| Post-Memorial Gap | May 28 – Jun 14 | Gap-fill pricing; midweek discount; 3-night weekend specials | 1–2 nights |
| Juneteenth + Father's Day 🎣 | Jun 19–22 | Start bumping rates — Juneteenth (Jun 19) is a federal holiday; Father's Day (Jun 21) drives last-minute travel | 2 nights |
| Pre-July 4th Ramp | Jun 27 – Jul 2 | Premium pricing; 3-night minimum recommended; lock in your July 4–6 rates NOW | 3 nights |
| July 4th Weekend 🎆 | Jul 3–6 | Peak of the summer — 40–55% above base; 3-night hard minimum; no last-minute discounts | 3 nights hard |
🔑 The underrated June move: Most STR operators don't update their listing description and headline to reflect the summer season until late June. Do it now. Swap in language that emphasizes outdoor space, proximity to summer events, A/C quality, or anything "dad-friendly" for Father's Day weekenders. It takes 15 minutes and can lift your visibility in platform search results before the Juneteenth-Father's Day cluster. 🎯
📊 One data point to sit with: Today's weak new home sales report (622K annualized, lowest in 3 months) signals that housing affordability is still the dominant theme for most Americans right now. That's actually a tailwind for STRs — people who can't or won't buy are still traveling, and they're staying in short-term rentals at higher rates than pre-2022. The STR demand pool is structural, not just seasonal. 🏡➡️🏖️
Scaling your STR portfolio or looking at your next acquisition? Connect with our STR loan specialist here — DSCR loans are structured very differently from primary home financing, and the qualification math can work in your favor in high-revenue markets. Looking to upgrade before the July 4 rush? Our 0% interest furnishing and renovation partner can still make it happen in time. 🛁
📚 TODAY'S TO-DO LIST (BY READER TYPE)
| You Are... | Your One Action Today |
|---|---|
| 🏠 First-Time Homebuyer | Go to NCSHA's housing help directory and look up your state's HFA program. Write down the income limit and current DPA amount available. Then ask your next lender conversation: "Are you an approved originator for this program?" |
| 🔄 Rate Watcher / Refi Candidate | Today's PCE monthly print came in softer than expected (+0.2% core vs. +0.3% feared). Mark June 11 on your calendar for May CPI — the last major data print before the FOMC meeting. That number + today's = the June cut decision. |
| 💰 Cash Saver / Inflation Worrier | Go to TreasuryDirect.gov today. Look up the current I-bond rate. If you haven't bought your $10K this year, you have until December 31 to do so. With PCE at 3.8%, sitting in cash is a silent loss. |
| 🏘️ Real Estate Investor | New home inventory just hit 9.4 months of supply — builder desperation territory. Model what a seller/builder-funded 2-1 buydown does to your Year 1 cash flow on a new construction rental. You may be surprised how much it changes your DSCR. While you're at it, get a cost seg estimate here. |
| 🏖️ STR Operator | Log into your platform and set your July 4–6 nightly rate with a hard 3-night minimum right now. Don't wait for June. Early bookers for Independence Day start searching in late May — if your listing isn't priced and available, they're booking someone else's. 🎆 |
| 📈 General Finance Reader | With PCE confirmed at 3.8% and core at 3.3%, take 10 minutes and check the real return on every savings account you hold. After tax and inflation, are you actually growing purchasing power — or just running in place? Hint: most savings accounts right now are negative in real terms. |
🎯 Quick Links — Get Connected
🏠 Primary home purchase or refi → Match with a lender for your situation
🏘️ Investment property loan → Get connected with an investor loan specialist
🏖️ STR / Airbnb loan → Talk to an STR loan specialist
🛁 STR furnishing/renovation (0% interest) → Explore furnishing and renovation financing
📊 Cost segregation study estimate → Get a free cost segregation estimate
💡 For real estate investors: If you own investment properties and have never run a cost segregation study, you may be significantly overpaying on taxes. Cost segregation accelerates depreciation — which can mean five figures or more in Year 1 tax savings alone. Get a free estimate from our tax partner here.
That's the Thursday wrap! ☕ Big data day is officially behind us. PCE matched, GDP got nudged lower, claims softened a tick — the bond market filed it all under "fine, we'll wait for May CPI." Which means June 11 is the next real catalyst. Circle it. 📅
Tomorrow's newsletter comes with four Fed speakers on the calendar (Schmid at 6:30am ET, Bowman at 9:10am, Paulson at 9:15am, Daly at 12:40pm). That's a lot of Fed voices in one morning — watch for any signal on June 17–18. Talk tomorrow. 👋
— The Lending Letter Team
📬 Published Monday–Saturday | Next edition: Friday, May 29, 2026
Disclaimer: The Lending Letter is published for informational and educational purposes only. Nothing in this newsletter constitutes financial, investment, tax, or legal advice. Mortgage rates are sourced from Mortgage News Daily and are subject to change. Individual rates will vary based on credit score, loan-to-value ratio, property type, loan type, and lender. DPA program availability, income limits, and loan terms vary by state, lender, and funding availability — verify current eligibility with an approved originator. I-bond rates reset semi-annually and are subject to change; verify current rates at TreasuryDirect.gov before making investment decisions. Typeform links connect readers with third-party lender and service partners; The Lending Letter may receive compensation for referrals. Past performance of any financial strategy is not indicative of future results.