Better Home & Finance Holding Co (BETR)

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of Better Home & Finance Holding Company’s (together with its consolidated subsidiaries, the “Company,” “we” “our” or “us”) financial condition and results of operations should be read together with our audited consolidated financial statements as of December 31, 2025 and for the years ended December 31, 2025 and 2024, in each case, together with related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our condensed consolidated financial statements and related notes as of and for the quarterly period ended June 30, 2026, included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

Company Overview

We are an AI-native home finance company on a mission to make homeownership cheaper, faster, and more accessible for all Americans. Our services offer consumers a seamless experience that eliminates friction and complexity across every stage of homeownership including purchase, refinance, home equity, and sale.

Founded in 2015, we built our business with an AI-first mindset that remains at the core of everything we do. Our proprietary platform, Tinman®, is trained on $110B in origination volume and grew its share of volume by 38% from 2024 to 2025. The platform automates the most time-consuming parts of the mortgage process and enables faster decisions to create a better experience for consumers navigating the biggest financial decision of their life.

The home is among the world’s largest and most tangible asset classes. While other industries have undergone end-to-end digital transformations, the homeownership journey remains mired in legacy inefficiencies. High transaction costs, regulatory complexity, and a sprawling intermediary stack come at the expense of consumers and limit digital adoption across the industry. We believe the homeownership experience is broken, and we're fixing it.

Designed to scale across products, channels, and market conditions, Tinman® is not just the engine behind Better; it is how we are modernizing the broader mortgage industry. Through Tinman®, we partner with lenders, banks, and financial institutions to bring AI-driven efficiency and savings to their own customers, helping transform an industry long overdue for change.

Business Environment

The mortgage industry continued to operate in a dynamic macroeconomic and geopolitical environment during the second quarter of 2026. In June 2026, the U.S. Federal Reserve maintained the federal funds target range at approximately 3.50% to 3.75%, continuing its restrictive monetary policy stance as inflation remained above the Federal Reserve's long-term 2% target, despite showing signs of moderation.

Mortgage rates remained elevated throughout the quarter, although they exhibited periodic volatility driven by changing inflation expectations, treasury yield movements, and geopolitical developments. The continuation of conflict in the Middle East, including disruptions affecting the Strait of Hormuz, contributed to volatility in oil prices and financial markets, creating additional uncertainty around the interest rate outlook and mortgage financing conditions.

Elevated borrowing costs continued to constrain overall mortgage origination activity, with refinance activity and demand among rate-sensitive consumers particularly affected, as prevailing rate levels limited the incentive to refinance. Ongoing home affordability challenges, resulting from higher home prices and limited housing inventory, represented a further headwind to origination volumes broadly. Despite these pressures, purchase mortgage demand remained comparatively durable, reflecting the extent to which purchase activity is driven by non-discretionary, life-event factors such as relocation, household formation and job changes that occur independent of the rate environment, making it less cyclical than refinance activity. At the same time, lenders with diversified product offerings, including home equity products, continued to be better positioned to address evolving consumer financing needs and benefit from demand that tends to increase in higher-rate environments.

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Our Business Model

We generate revenue through the production and sale of loans and other product offerings through our platform. The revenue and mix of revenue as a percentage of total revenue attributable to our sale of loan production (Gain on loans, net) and Better Plus (Other revenue) and net interest income for the three and six months ended June 30, 2026 and 2025 is as follows:

Home Finance—Gain on loans, net

We produce a wide selection of mortgage loans and leverage our platform to quickly sell these loans and related mortgage servicing rights (“MSRs”) to our loan purchaser network. Historically, the Company utilized three primary channels for customer acquisition; however, our current operations have been streamlined to focus on two key sourcing channels: our D2C channel and our Platform channel. Through these channels, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing revenue per loan. Through our Platform channel, we generate revenue from various partnerships with mortgage originators and technology companies, as well as our in-market loan officer teams, which ramped over the course of 2025. These partnerships come in different structures. For some, we access our partners’ customer base and originate loans on our platform. In other arrangements, the partner originates the loan and we provide the technology, underwriting, and fulfillment.

Better Plus—Other revenue

We complement our residential mortgage loan products through Better Plus, which includes a set of non-mortgage homeownership products and services offered primarily through third-party strategic partners. These offerings include referrals to real estate agents, title insurance and settlement services provided through third-party providers, and access to homeowners insurance policies through a digital marketplace of insurance partners. In these arrangements, we generally act as an agent or referral source and receive fees from third-party providers. Better Plus products are integrated into our platform to support customers throughout the homeownership process.

Mortgage Interest Income —Net interest income

As we originate mortgages, there is a short period between the funding of a loan and its sale into our investor network. During this time, we borrow against our warehouse lines of credit as a source of capital and pay interest on those borrowings. It is not uncommon for a mortgage to be awaiting sale while the borrower's first interest payment is collected. In these instances, Better collects and recognizes that interest as revenue. Once the mortgage is sold to our investor network, the warehouse line of credit is repaid and we do not collect any future interest payments on that loan.

International Lending Revenue—Other revenue

International lending revenue consists of revenue from our international lending activities, primarily in the U.K., which has expanded via acquisitions in prior years. International lending activities primarily include broker fees earned via our

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digital mortgage broker in the U.K. During 2024, management enacted a plan to sell several entities in the U.K. One of those sales was completed in the three months ended September 30, 2025, with the remaining expected to be completed in 2026. As such, the revenue from our non-core international operations is winding down.

Key Business Metrics

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate plans and make strategic decisions. Our key business metrics enable us to monitor our ability to manage our business compared to the broader mortgage origination market, as well as monitor relative performance across key purchase and refinance verticals.

Key measures that we use in assessing our business include the following ($ in millions, except percentage data or as otherwise noted):

Home Finance

Refinance Loan Volume represents the aggregate dollar amount of refinance loans funded or processed in a given period based on the principal amount of the loan at refinancing date.

Purchase Loan Volume represents the aggregate dollar amount of purchase loans funded or processed in a given period based on the principal amount of the loan at purchase date.

HELOC Loan Volume represents the aggregate dollar amount of HELOC and closed-end lien loans funded or processed in a given period based on the principal amount of the loan at funding.

Loan Volume represents the aggregate dollar amount of all loans funded or processed in a given period based on the principal amount of the loan at funding.

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D2C Loan Volume represents the aggregate dollar amount of loans funded or processed in a given period based on the principal amount of the loan at funding that have been generated from direct interactions with customers using all marketing channels other than our partner relationships and our Tinman® AI Platform channel.

B2B Loan Volume represents the aggregate dollar amount of loans funded or processed in a given period based on the principal amount of the loan at funding that have been generated through our B2B partner relationship with Ally. This channel was discontinued upon the wind-down of the relation

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, in each case, together with related notes thereto, included elsewhere in this Annual Report. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Annual Report. See “Cautionary Statement Regarding Forward-Looking Statements.” Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. Certain amounts may not foot due to rounding.

Company Overview

We are a technology-enabled homeownership company that offers mortgage, home equity, and other homeownership products through a digital platform. Our holistic solution and marketplace model, enabled by our proprietary technology, allows us to take one of our customers’ largest and most complex financial journeys-the process of owning a home-and transform it into a more simple, transparent and ultimately affordable process. Our goal is to do our part in lowering the hurdles to homeownership by offering the lowest prices and the best experience to our customers.

We are a technology-driven organization. We are seeking to disrupt a business model by leveraging our proprietary platform, Tinman, to enable us to deliver on what we believe is most important for our customers: a seamless experience, time saved, and higher certainty on the single biggest financial decision of their lives. Through this process, we aim to reduce the cost to produce a loan and in the future to create a platform with all homeownership products embedded into a highly automated, single flow, allowing us to pass along savings to our customers.

We are focused on improving our platform and plan to continue making investments to build our business and prepare for future growth. We believe that our success will depend on many factors, including our ability to drive customers to our platform, and convert them once they come to us, achieve leverage on our operational expenses, execute on our strategy to fund more purchase loans and diversify our revenue by expanding and enhancing our offerings. We plan to continue to invest in technology to improve customer experience and further drive down labor costs through automation, making our platform more efficient and scalable.

Our Business Model

We generate revenue through the production and sale of loans and other product offerings through our platform. The revenue and mix of revenue as a percentage of total revenue attributable to our sale of loan production (Gain on loans, net) and Better Plus (Other revenue) and net interest income for the years ended December 31, 2025 and 2024 is as follows:

Home Finance—Gain on loans, net

We produce a wide selection of mortgage loans and leverage our platform to quickly sell these loans and related mortgage servicing rights (“MSRs”) to our loan purchaser network. We source our customers through two channels: our D2C channel and our Platform channel. In 2025, we wound down our Ally Partnership, previously referred to as “B2B channel,” which concluded as of December 31, 2025. Through our D2C channel, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing D2C revenue per loan. Through our Platform channel, we generate revenue from various partnerships with mortgage originators and technology companies, as well as our in-market loan officer teams, which ramped over the course of 2025. These partnerships come in different structures. For some, we access our partners’ customer base and originate loans on our platform and in other arrangements, the partner originates the loan and we provide the technology, underwriting, and fulfillment.

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Better Plus—Other revenue

We complement our residential mortgage loan products through Better Plus, which includes a set of non-mortgage homeownership products and services offered primarily through third-party strategic partners. These offerings include referrals to real estate agents, title insurance and settlement services provided through third-party providers, and access to homeowners insurance policies through a digital marketplace of insurance partners. In these arrangements, we generally act as an agent or referral source and receive fees from third-party providers. Better Plus products are integrated into our platform to support customers throughout the homeownership process.

Mortgage Interest Income —Net interest income

As we originate mortgages, there is a short period between the funding of a loan and its sale into our investor network. During this time, we borrow against our warehouse lines of credit as a source of capital and pay interest on those borrowings. It is not uncommon for a mortgage to be awaiting sale while the borrower's first interest payment is collected. In these instances, Better collects and recognizes that interest as revenue. Once the mortgage is sold to our investor network, the warehouse line of credit is repaid and we do not collect any future interest payments on that loan.

International Interest Income —Net interest income

Through our UK subsidiary, Birmingham Bank conducts typical banking activities, including collecting deposits from customers on which it pays interest, and deploying those deposits as a source of capital to originate mortgages on which it collects interest payments.

International Lending Revenue—Other revenue

International lending revenue consists of revenue from our international lending activities, primarily in the U.K., which has expanded via acquisitions in prior years. International lending activities primarily include broker fees earned via our digital mortgage broker in the U.K. During 2024, management enacted a plan to sell several entities in the U.K., one of those sales completing in Q3 2025, with the remaining expected to be completed in 2026. As such the revenue from our non-core international operations is winding down.

Factors Affecting Our Performance

Fluctuations in Interest Rates

Changes in interest rates influence mortgage loan refinancing volumes and our mortgage loan home purchase volumes, balance sheet and results of operations. In a decreasing interest rate environment, mortgage loan refinance volumes typically increase. Conversely, in an increasing interest rate environment, mortgage loan refinancing volumes and home purchase volumes typically decline, with mortgage loan refinancing volumes being particularly sensitive to increasing interest rates as customers are no longer incentivized to refinance their current mortgage loans at higher interest rates. However, increasing interest rates are also indicative of overall economic growth and inflation that could generate demand for more cash-out refinancings, purchase mortgage loan transactions and home equity loans, which may partially offset the decline in rate and term refinancings resulting from a rising interest rate environment.

In addition, the majority of our assets are subject to interest rate risk, including (i) loans held for sale (“LHFS”), which consist of mortgage loans and home equity line of credit and closed-end second lien loans held on our consolidated balance sheet for a short period of time after origination until we are able to sell them; (ii) interest rate lock commitments (“IRLCs”); (iii) MSRs, which may be held on our consolidated balance sheet for a period of time after origination until we are able to sell them; and (iv) forward sales contracts that we enter into to manage interest rate risk created by IRLCs and uncommitted LHFS. As interest rates increase, (i) our LHFS and IRLCs generally decrease in value, (ii) the corresponding hedging arrangements that hedge against interest rate risk typically increase in value and (iii) the value of our MSRs (to the extent retained) tend to increase due to a decline in mortgage loan prepayments. Conversely, as interest rates decline, (i) our LHFS and IRLCs generally increase in value, (ii) our hedging arrangements decrease in value and (iii) the value of our MSRs tend to decrease due to borrowers refinancing their mortgage loans. In order to mitigate direct exposure to interest rate risk between the time at which a borrower locks a loan and the sale of the loan into our purchaser network, we enter into IRLCs and other hedging agreements.

In order to manage interest rate risk on our Loans Held for Investment portfolio, we have entered into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of Loans Held for Investment resulting from changes in interest rates. We designate these interest rate swap contracts as fair value hedges that

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qualify for hedge accounting under Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging. As interest rates increase the value of our Loans Held for Investment generally decrease in value and the corresponding hedging arrangements that hedge against interest rate risk typically increase in value.

We expect that our results will continue to fluctuate based on a variety of factors, including interest rates, and that as we continue to seek to increase our business and our Funded Loan Volume, we may continue to incur net losses in the future.

Market and Economic Environment

The consumer lending market and the associated loan origination volumes for mortgage loans are influenced by general economic conditions, including the interest rate environment, unemployment rates, home price appreciation and consumer confidence. Purchase loan origination volumes are generally affected by a broad range of economic factors, including prevailing interest rates, the overall strength of the economy, unemployment rates and home prices, as well as seasonality, as home sales typically rise in the second and third quarters.

Mortgage loan refinancing volumes are primarily driven by fluctuations in mortgage loan interest rates. While borrower demand for consumer credit has typically remained strong in most economic environments, potential borrowers could defer seeking financing during periods with elevated or unstable interest rates or poor economic conditions. As a result, our revenues can vary significantly from quarter to quarter, and changes to interest rates and inflationary macroeconomic conditions significantly affect our financial performance.

Constrained Home Supply Ultimately Drives Further Construction and Purchase Volume

The supply of homes available for purchase and the market prices for homes on offer are significant drivers of purchase mortgage volume. We believe that constrained home supply contributes to constrained new home sales and purchase mortgage volume. Concurrently, constrained home supply, including as a result of elevated interest rates, and substantial demand has led to higher home prices, which in turn slows both growth of new home sales and purchase mortgage volume. In the longer term, however, we believe that such imbalances of supply and demand could drive greater home building to bring additional home

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