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How to Go From 1 to 10 Rentals with “The Stack” Method
The idea of building and scaling a rental portfolio can seem daunting to most rookies starting off. What if we told you there’s a realistic, proven formula most rookies don’t discover until they’ve already taken their first step? Today, we’re walking you through a method for turning one deal into 10 (or more) without needing a ton of cash!
Welcome back to the Real Estate Rookie podcast! If you’re a new investor, financial freedom can feel far away, but what if we told you that you could go from a single rental property to 10 units in just a few years? The stack method is a proven formula that helps investors build their portfolios on realistic timelines, with realistic budgets! Today we’re breaking down exactly how it works, and how to double your portfolio size with every deal.
We’ll walk through the full stack playbook step by step, how house hacking combined with HELOCs (home equity lines of credit) can fund your next down payment, how to get that down payment to just 3-5%, and the best markets for stacking in 2026.
You don’t need hundreds of thousands of dollars to get started, you just need to follow the easy steps in today’s episode!
Tony:
Ever wondered how investors buy dozens of rental properties? The truth is most of them didn’t start with big trust funds or nest eggs or even a lot of cash. They just used a version of a very simple but proven strategy.
Ashley:
If you’re a new investor, financial freedom can seem so far away, but you could go from a single rental property to 10 rentals in just a few years, and that’s by using the stack method. This is probably one of the easiest ways to build a rental portfolio in 2026.
Tony:
And the best part is you don’t need hundreds of thousands of dollars to do this. If you can save up for a modest down payment for one single family home, you’ll have everything you need to set the strategy in motion. And before you know it, you’ll have your own rental portfolio and most importantly, a proven blueprint for scaling as far as you want to go.
Ashley:
This is the Real Estate Rookie Podcast. I’m Ashley Kehr.
Tony:
And I’m Tony J. Robinson. And with that, let’s talk about the stack method. So let’s explain what it is and how it works. So the idea of the stack method, 30,000 foot view, is that you start with a small property, single family home, and you basically with every acquisition, buy a slightly larger property. So for example, let’s say the first thing you buy is just a regular old single family home in year one. Then in year two, instead of buying another single family home, you buy a duplex. And then in year three, instead of buying a duplex, you buy a fourplex. And then in year four, instead of buying another fourplex, you buy an eighplex and so on. So you go one, two, four, eight, six, 32, 64, 128. I don’t know what comes after 128 times two, but you get the point there, right?
It’s like every time we’re doubling and in just a few years, you can actually build a decently sized real estate portfolio.
Ashley:
Sometimes this is also done by selling a property too. So you buy one property and then you do a 1031 exchange into a duplex, then you do it again into a bigger property. So instead of keeping all these properties, you can just exchange into bigger and bigger. But I think today we’re going to focus more on you’re actually going to keep these properties in your portfolio so that at the end of these years, you have a really nice nest egg that you’ve built for yourself over time. And I think one thing people get really caught up on is the how to get rich quick. And in real estate, there are ways you could flip a house and make a lot of money in that one transaction. But one of the safest bets is to use the stack method. It’s a proven method that will build you wealth, builds you cash flow.
It will create all of these financial opportunities for you, but it will take time. But this is a proven path that works that you can take if you want to be a real estate investor and build a nice portfolio.
Tony:
I think the other benefit too is that by stacking it up in this way, it’s just easier for a rookie investor to digest and believe as possible because telling someone, “Hey, you’re going to buy an eight unit when you’ve never purchased anything,” for a lot of people that might feel a little intimidating, but telling someone, “Hey, you’re just going to buy one single family home as your starting point.” It allows someone to learn the ropes. They gain the important skills and the confidence to then go on and buy the next deal. And Ash, we see it so often where we interview folks in the podcast and they’ve spent years thinking about buying that first property. And then when they finally get the first one, they get the second one super, super fast right afterwards. It’s like, “Hey, I’ve been listening to the podcast for five years.
Didn’t do anything. Bought my first one and six months later I was under contract on my second one.” So even just that momentum of getting into the first deal will help the stack method move you quickly toward a bigger portfolio.
Ashley:
Another advantage of this is if you’re buying every year, every couple years, you can actually use primary residence loans if you’re keeping this property as your primary residence for usually the loan product will require a year. So that means you could be putting down as little as three to 5% on the property. And then you live in there for a year. First year you have your single family, live there for a year, you move out, you turn into rental, and then you’re moving on to a duplex and you’re living in one unit renting out the other unit. And you can do this all the way up to four units. So five unit, it becomes commercial and you wouldn’t be able to get a residential loan on that product anymore. I mean, you could still probably… Actually, I don’t know if a commercial loan would allow you to live in one of the units with a five unit.
Do you know that?
Tony:
I actually don’t. I would believe so. I feel like we’ve interviewed people on the podcast who’ve purchased larger properties and they’re like, “Yeah, I live there to help save on costs.” I even think about Heather Blankenship when she bought her first RV park. She was like, “I was literally living in the back office.” So I would assume that there’s probably some place where it makes sense to do that.
Ashley:
But yeah, that’s another advantage as to using this method too, is the financing that you can get by spreading it out over time. DSER loans have become very popular where they’re not looking at you personally, they’re not looking at your debt to income. They’re looking at the actual property and the revenue it generates and what its expenses are and making sure that the property can actually cover the mortgage and the expenses. And with that, you can go ahead and get a lot more loans because they’re not looking at you personally, but you’re also paying way more in closing costs. There’s a lot more fees associated to get this loan product and you’re also paying a higher interest rate than you would if it was your primary residence or if you went to a small local bank and just got a conventional loan for an investment property too.
Okay, so the stack is sounding pretty good. This is a path maybe you want to take and we’re going to show you how to do it. We have to take a quick break, but when we come back, we’re going to give you the full playbook. So right after a word from our show sponsors.
Okay, welcome back. Now let’s get stacking. Sorry guys, Tony made me say that to be corny, but here’s the full stack playbook. Okay? So here’s a little side note. If you can house hack while stacking, you’re going to have a huge advantage. So like we talked about earlier, that down payment is going to be easier to achieve by only having to put three to 5% down if you’re doing an FHA loan or if you’re doing a primary residence conventional loan. And it will be easier to save up for those down payments because you’re not putting down 20% for each property. But you don’t have to do that for the stack method. If you only want these as investment properties and you don’t want to house hack, this can happen for you too if you don’t want to live in any of the properties. And I guess I should clarify on that.
When I say house hack, you don’t have to live with other people in that first unit because you’re buying a single family home. But if you’re going to stack the method into a duplex, a triplex, you’re most likely going to want to rent out the other units at least. So just keep that in mind as you decide which path you want to take as to how much you actually want to house hack and be involved. But you could always house hack the first one, single family home, and then going forward, you could always just buy those as investment properties and not house hack them.
Tony:
Now, one of my favorite ways to also kind of leverage, especially in a single family home, the house hack is called the Craig Kurlap method where our friend Craig who wrote the BiggerPockets book on house hacking, he talked about the first time that he house hacked. He bought, I don’t know, a four bedroom house as a single guy and he rents out every single one of those four bedrooms and he slept on the couch. So that is like house hacking to the extreme, but it worked out really well for him and he sacrificed for a few properties and he was able to build a pretty meaningful portfolio. So if possible, rent out the other rooms in the single family and then just try and save as much of that extra cash as you possibly can so that once your occupancy period does end, you now have the ability to hopefully have some cash shape to then step into that next one.
And again, at three and a half percent down, depending on the market that you’re in, if you’re not spending anything on your first mortgage because you’ve rented out all the extra space, your ability to accelerate this becomes a lot easier. So renting out the room, super helpful.
Ashley:
So now we’re going to go into step two, and that is you’re going to buy a duplex next. So you could decide to house hack this again where you’re putting three to 5% down or you could just have this as investment property and put 20% down. So your timeframe is going to be how long it takes you to actually save up the down payment for this next property plus having the money in reserves and money for closing costs. One thing that you should do, which Tony just did this, and this is a very smart move to do before you acquire and move to the next property, is get a HELOC, a home equity line of credit on your current primary residence. So if you’ve only lived there a year, there’s probably not a ton of equity available in that property, but some is better than none.
Even if you’re taking a $20,000 line of credit, that’s $20,000 that you can use for your next deal. That’s $20,000 that can help cover a rehab that you’re going to pay off. So get your line of credit because it is much harder to get a line of credit on an investment property and you’re not going to get as great of terms. Tony, on your line of credit that you just got for your primary residence, what was the introductory rate? What was the discounted rate they gave you for six months or whatever it is?
Tony:
I want to say it was like 4.99% was the introductory rate. It was a pretty reasonable rate. And after that it’s variable based on one of the index rates, I can’t remember which one, but 4.99 for the initial term, which I think was like six months.
Ashley:
Yeah. And on my commercial loans, I think my lines of credit, one is at 7.75% right now and the other one’s at 8%. So as you can see, a big difference right there that he’s getting that introductory rate on those lines.
Tony:
But even at 8%, you compare that to other types of credit, like tell me a credit card that’s going to give you 8%. So even at the elevated rates, it’s access to really, really solid terms to then be able to go out and fund your next acquisition. And that’s exactly what we did. We pulled the HELOC on our first primary and we just took that money and use that as a down payment on our second one. And the rents from the property we’re moving out of will cover the initial mortgage payment and the HELOC payment. So we’re not out of pocket anything for this HELOC, so it worked out really well.
Ashley:
So in step two, you’re going to get your HELOC on your property before you close on your next one or move into your next one. If you are not moving to the duplex, then not a rush because this other property will stay your primary, but you want to do it while it is your primary. Then after that, you can go ahead and close on your next property and move into it and you can still keep that HELOC. You don’t need to close the HELOC if it is no longer your primary residence. You still can keep the HELOC open for the life of the HELOC, whatever the term is and your mortgage acts there, their line of credit docs. So next, if you’re going to continue to house hack, you’re going to move into the duplex, rent the other side out, and make sure that you rent out your single family home, your first property.
If you’re not going to move into your next investment, then you’re going to want to get both of those units rented out.
Tony:
So then the next step is to, again, slightly scale up the size, go from a duplex to a triplex. And we don’t need to belabor this, but basically you’re going to move out, rent out the whole duplex. Now you have your single family home, which maybe you’re still renting by the room to really juice the cash flow. You’ve got your duplex, but now you’re renting out.
Ashley:
So then you only have to rent out your room.
Tony:
Yeah, that’s what I’m saying. It’s just your room you got to rent out. So you rent out your room, then you rent out both sides of the duplex, and then you move into the triplex and repeat that same process. 3.5% down, 5% down. You rent out the other two sides. If you’re someone who can even do it, rent out the additional rooms in your third of the property as well. And we just repeat, rent and repeat. And then step four becomes the same thing where you buy a fourplex, rent out your space inside the triplex and repeat that same process. And guys, in the span of just a few years, you’ve got a 10-unit portfolio. Now, just the thing that I’d add to, because someone might be thinking, “Well, Tony, Ashley, sure, this sounds great, but am I really going to be able to make enough in 12 months to then have enough money for a down payment?” Maybe not.
Even if it takes you two years, three years to save another three and a half percent, the process is still the same. But the thing that I would challenge you on is think through the ways that you can juice more cashflow out of the properties. So again, we already talked about renting by the room in the single family home. Well, can you expand that same strategy to the duplex and the triplex? Instead of doing a traditional long-term rental, can you do a furnished midterm rental in your market? Can you do a short-term rental in your market? There are other cashflow levers we can pull within these rentals to more quickly get you to the point of being able to have another three and a half to 5% down. So focus on that as opposed to, “Hey, this doesn’t feel super realistic for me.”
Ashley:
And a couple notes too, as you’re going from property to property, don’t forget that you can do that HELOC on each one if it’s your primary residence. So at the duplex, the triplex, you can go before you move on to the next one is to pull more lines of credit. And even that’s the nicest thing about a line of credit. If you’re not using them, you’re not paying anything. So they can just sit there and you may never use it, but at least you know you have that money to tap into if you want to. And I think too is a lot of line of credits, especially if you’re going to small local banks, is they won’t charge you for an appraisal. They won’t charge you any fees. It is literally free for you to go and get these lines of credit. And then some of them have mine has if I close the line of credit, so if I sell the property or I close the line of credit and don’t want it anymore within, I think it’s three years, I owe them 1200 bucks because I didn’t use the line of credit for as long as they wanted me to or have it open for that long.
So there are a couple things like that, but you keep it open. And in our kind of scenario here, you’re going to have the property, you’re not going to sell them right away, so that shouldn’t be an issue. But that’s another thing to keep in mind as you’re going step to step, you’re going to do these other little things too. With the HELOCs, they will be looking at your debt to income. With the mortgages on these properties, they will be looking at the debt to income. Sometimes when you are house hacking a property too, they’re only going to take into consideration a percentage of the rental income that you’re getting. So even if the tenant is paying you $1,000 a month and say your mortgage is 2000, so that’s half, sometimes they won’t take into account the full thousand dollars. Sometimes it may only be like 70% of the rent they’re actually going to include and count towards your income to offset the mortgage payment too.
So in this scenario, if you are doing house hacking, you will have to be careful of the lines of credits and the mortgages with your debt to income as you go along. So don’t quit your W2 job on the triplex in year three. Keep it until you finish the stack method to really help you qualify for these loans to be able to get these properties too.
Tony:
So guys, that’s how the stack method works and how we’ve adapted it for the rookie audience. But next, we’re going to dig into some numbers so you can see the real power of the strategy. So stick around. We’ll be right back. All right guys, how does the stack method compare to just buying a bunch of single family homes? Let’s do the math. So we’re going to talk about scaling with the stack method that we just walked through versus just buying more single family rentals. So for the single families, let’s assume that it’s a $300,000 single family home and you’re making between 1,800 to $2,200 a month in rent at 20% down, let’s say $60,000 investment. Guys, the truth is that you’re unlikely to cash flow in a lot of markets with just kind of like the vanilla strategy in this way. There are also a lot of markets where it will work.
So there’s 20,000 cities in the United States.This isn’t us saying that there aren’t any markets in the country where traditional single family homes don’t work, but there are also a lot of markets where the numbers are pretty tight given where prices and interest rates are today. And even when putting down 20%, it’s just sometimes tough to find properties that’ll cash flow. So you might need 20 or 30 of them to actually achieve financial freedom. So just a much bigger portfolio and maybe some more headaches around managing it as well.
Ashley:
So let’s go through an example of the stack from year to year. And we’re going to start off buying 300,000 single family home, making 1,800, 2,200 in rent, and say we needed 10,000 to 15,000 for a down payment if we’re thinking of three and a half to 5%. So this might not cash flow at first, but while you’re living there, you can save a lot of money in rent, you’re getting mortgage pay down on the property. Then once you move out in a year, you’re going to rent out the property. 20% down was 60,000. So we went from like 10 to 15,000 to 60,000 if you’re just going to have it as an investment property and that can be unlikely to cash flow in many markets. But then we’re going to skip to the duplex. We’re going to save 400,000 for a duplex. This is making 1,500 to $1,900 in rent per a unit.
So if we’re going to house hack it, we’re looking at 14 to $20,000 down. 20% down, we’re looking at $80,000. So again, these numbers will depend on how much you want to save or how fast you can save these amounts of money and how much you are willing to sacrifice by house hacking. For example, in order to get a duplex sooner, are you willing to house hack to spend $60,000 less on your down payment? So how long will it take you to save that $60,000? If you’re saying you can save $20,000 a year, you could get into this duplex in a year compared to waiting three years if you have to save another 60,000, four years actually. So the next we’re going to the triplex 475,000. That’s saying again, 1,500, 1,900 per a unit. 3.5 to 5% down is 16,000 to 23,000. 20% down is 95,000.
And when you’re putting down the 20% down payments, the property is more likely going to cash flow because your mortgage payment is going to be less because you’re putting more money down. So also your risk should play a factor in tier too. As we’re comparing these numbers, yes, it sounds great to put less money down, but also you have less risk if you’re putting more money down. So just something to think about too as to what your risk tolerance is also. And then we’re getting to the quadplex purchase for 550,000, and that’s the same 1,500, 1,900 in rent per unit. So if you’re doing three and a half to 5% down, that’s 20,000 to 27,000. And this will most likely cash flow in a lot of markets at this price, and you could potentially live rent-free for here while you’re in this property. And then the next one 20% down would be 110,000 to be able to get into this property.
Now remember, while you have these other properties stacking over time, you should have cash flow from them, at least something, and you can be using that cash flow to save for each additional investment that you’re buying for each down payment going forward too on these properties. All
Tony:
Right. So let’s talk a bit about which markets this strategy will work best in because not all markets are made equal. So first, and I alluded to this earlier, is that not all markets have a bunch of small family inventory. Again, where I’m located in Southern California, we just simply don’t have a lot of small multifamily properties, a lot of large multifamily, big apartment complexes, but the duplexes, the triplexes, those just aren’t super common. We’re very kind of suburban sprawl type area where there’s more single family homes or large apartment complexes. But if your market does, I mean, you could give yourself a big advantage through house hacking. Otherwise, you might need to consider investing out of state. So we’re really looking for markets where there are affordable home prices and really where the price to rent ratio is strong. So if I look at what the properties can rent for and I compare that to the purchase price, is there a strong ratio there?
Day one cash flow, can we actually get in today and make some meaningful cash flow? And then also maybe to a lesser extent is the appreciation potential. Because if the stacking method of the goal here is like, hey, can we quickly build up cash flow? Then maybe appreciation’s a lesser important metric, but still something to at least look at. And then in terms of the markets that we might want to consider, actually BiggerPockets guys, they just put out a kind of summer 2026 rent to payment report. And these are markets across the country where you can still sell cash flow. So if you just search rent to payment report BiggerPockets, I’m sure it’ll pop up for you for summer 2026. But in there, we’ve got cities like Indianapolis, Cleveland, Memphis, Kansas City, Missouri, Birmingham, Pittsburgh, St. Louis, Columbus, Oklahoma City, Cincinnati, Louisville, Detroit, Milwaukee. So all in a similar part of the country.
We’re not seeing a whole heck of a lot on the West Coast. Actually, nothing on the West Coast, nothing in the Northeast, nothing even in the Southeast really. So we’re all kind of up and down in that Midwest corridor there. Those markets tend to be a little bit better as it relates to cashflow.
Ashley:
Now, just a couple things to remember before you start stacking is you don’t have to buy a property every single year. Even if it takes you several years to purchase that next property, you’re still going to be better off than somebody that’s not starting, even if you take longer to grow and scale. And honestly, there are days that Tony and I both regret growing and scaling as fast as we did. And I didn’t even grow and scale that fast. It took many years to acquire my properties, but in one year I acquired eight properties, I think. I think Tony did 20 in one year and that was overwhelming and that we didn’t have the systems and processes in place. So sometimes the slow and steady actually can make you better off in the long run. So don’t feel rushed that you have to hit any kind of timeline, that you have to meet any expectation for this to work, that this is on your own timeline.
This is when you’re ready to execute on the next deal, when you have that down payment saved, when you have reserves, when you’re ready to move. And then also, even if it takes time to find better deals, that’s better than rushing into a bad deal. So even if you’ve got the down payment, you’re ready to move, you’ve got someone that wants to rent your house, don’t rush into the next deal. Make sure it is a good deal before you go and purchase that property. Well, thank you guys so much for joining us today on this episode of Real Estate Rookie. I’m Ashley, he’s Tony, and we’ll see you guys in the next episode.
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NYC’s pied-à-terre tax hits a legal wall a week before deadline
What the court told the city to fix
The order voids the mailed notices and the exemption process, which Ozzi called “unlawful burden shifting.” The city must also take down a roll of about 900,000 properties it posted online in July. It may replace that roll with a narrower list of homes actually subject to the surcharge.
Any new notices must explain how each property was flagged and disclose the records behind that determination.
“We’re gratified that the court has recognized we were right all along. The fact is that this administration failed to follow state law when it burdened New York City homeowners with proving they live in their own homes or be on the hook for paying a new surcharge,” said Randy Mastro, the attorney for three homeowners who said their primary residences had been wrongly identified.
Mayoral spokesman Matt Rauschenbach called the decision wrong. “The pied-à-terre surcharge is about a basic principle of fairness: if you can afford a luxury second home in New York City, you can afford to pay your fair share for the schools, streets and parks that make this city work,” he said.
Why co-op borrowers should pay attention
Mayor Zohran Mamdani announced the pied-à-terre in April with Gov. Kathy Hochul’s backing, pitching it as a way to close the city’s budget gap by taxing wealthy second-home owners. State lawmakers passed it on May 27, and it took effect July 1.
Wilbur Ross says New York’s pied-à-terre tax targets people who ‘can’t retaliate at the ballot box’
This week’s been rough for proponents of New York City’s pied-à-terre tax. On Monday, former Commerce Secretary Wilbur Ross filed a lawsuit against the state, calling the tax unconstitutional. On Tuesday, a judge ruled the city had to rollback the notices it sent out to property owners and all but basically start over. It follows a hectic rollout, coupled with threats and warnings that the young mayor’s video announcing the tax outside of billionaire Ken Griffin’s house would lead to the ouster of high-price items from the city. Those threats never formed.
What did, however, were the lawsuits. Ross on Monday joined a growing list of people who are suing either the city or the state over the tax. In an interview with Fortune, Ross said the new tax on luxury second homes targets the one group of owners who can’t vote against it.
“They don’t want voter retribution for taxes at the ballot box, so they impose these taxes on people who have no way to defend themselves,” Ross said. “That’s what this is all about.”
Ross, his wife, Hilary Geary Ross, and casino developer Steve Wynn sued the State of New York on Monday in Suffolk County Supreme Court. They argue the pied-à-terre surcharge violates both the state and U.S. constitutions. All three are Florida residents who own Manhattan apartments, and according to the complaint, the city’s Department of Finance billed the Rosses $83,531.52 on their co-op and Wynn $183,094.69.
Ross’ suit
Led by Pillsbury Winthrop Shaw Pittman partner James Catterson, Ross’ suit has three main arguments. The first is that the “surcharge” is really a property tax, based on property value, billed through the city’s property tax system and becomes a lien on the home if unpaid. The complaint claims it violates the state constitution because the constitution caps how much the city can raise through real-estate taxes. The new law says surcharge revenue doesn’t count toward that cap.
“The state, by fiat, cannot change the constitutional reality of what it is,” Ross said. “Surcharge on what?”
The complaint also argues taxing owners based on where they live discriminates against out-of-state residents. The suit says that violates the U.S. Constitution’s Privileges and Immunities and Commerce clauses, as well as equal protection guarantees in the federal and state constitutions.
“By their theory, there’s no limit to what they could do to non-residents,” Ross said. “We’ll put 100% tax every year on the property. 200%.”
Ross rejected officials’ claims that part-time owners don’t pay their share. He said owners subject to the tax use none of the city’s spending on education or health and welfare, and less policing, fire protection, and trash pickup, because they spend less than half the year in the city.
“How can you possibly consume more in less than six months than other people do in a whole year?” he said. He said nonresidents already pay more because their homes are worth more, and because nonresident co-op and condo owners don’t get the tax abatement given to primary residents.
“If my next-door neighbor in the building is a resident and he has the same size apartment I have, I pay more than he does,” he said.
When Fortune reiterated that the tax, according to NY Gov. Kathy Hochul, was meant to close the gap on New York property owners who “do not live in the City or pay City income tax,” Ross said: “There is no gap. This is an imaginary gap.”
He doesn’t object to higher taxes on the wealthy as long as the rate applies to everyone in a bracket.
“I don’t think it’s a good idea, but it’s legal,” he said.
Making the case
Forbes put Ross’ net worth at around $600 million in 2019, following some controversy alleging he inflated his net worth to be between $2.7 billion to $3.7 billion. Regardless, he and Steve Wynn (with a net worth of $4.3 billion per Forbes) are proving why there’s a need for the pied-à-terre tax in the first place, according to Hochul’s office.
“When Steve Wynn and Wilbur Ross try to cast themselves as sympathetic figures in a fight over paying their fair share on multimillion-dollar second homes, they’re making the case for the pied-à-terre tax as well as anyone could,” Jen Goodman, Hochul’s director of rapid response, told Fortune in a statement.
“Governor Hochul believes some of the wealthiest people in the world, and the powerful interest groups fighting on their behalf, can afford to help pay for the police officers, trash pickup and snow removal that keep New York City running,” she continued. “The Governor was proud to sign this legislation, and the state will defend it in court.”
Ross called the statement “silly” and said it didn’t address the legal question.
“It either is constitutional or it isn’t,” he said. “Unconstitutional is unconstitutional.”
Matt Rauschenbach, a spokesperson for New York City Mayor Zohran Mamdani, told Fortune in a statement that “the pied-a-terre surcharge demands that the wealthiest people who own second homes in NYC but don’t live in them pay their fair share towards funding safer streets, cleaner parks, and better schools.”
“The City is moving to intervene in these suits and will stand with our partners in Albany to defend the surcharge,” he continued. “And while the legal process moves forward, we will continue administering the surcharge fairly, efficiently, and in full compliance with the law, as we have done from day one.”
Still, Ross thinks the statements do little to address the unconstitutionality of the tax—and that he indeed does spend money in the city even if they’re rarely here.
“We aren’t here that much, so we have to ration what we do,” he said. “We eat out all the time. We shop here. We use Ubers and cars and things like that. So we do spend money here, and we help some of the cultural institutions.”
He said that spending supports jobs whose workers pay city income tax. Owners subject to the tax “hire more maids, use more drivers, use more Ubers, use more taxis, buy more things in the stores, support the charities more,” he said. “You can’t just look at it the other way. You’ve got to take everything into account.”
Inventiva at Stifel cardiometabolic forum: lanifibranor nears key test
Inventiva at Stifel cardiometabolic forum: lanifibranor nears key test
Amex Offer: Get Up to $330 Back on Delta SkyMiles Transfer Fees
Amex Offer for Delta SkyMiles Transfer Fees
There’s a new targeted Amex Offer that can reimburse up to $330 in fees when you use Delta’s Transfer Miles feature to move SkyMiles from your account to another established SkyMiles account. The offer is showing up on Delta SkyMiles cards only.
This is not for transferring Membership Rewards points to Delta. It applies specifically to the fees Delta charges when you transfer existing SkyMiles to another person’s SkyMiles account. Let’s see the details.
Offer Details
- Earn up to $330 back on eligible Delta SkyMiles transfer fees.
- Offer expires November 14, 2026.
- Transfers must be completed online through Delta’s Transfer Miles page.
- Statement credits are capped at $330 total per eligible Card Member account.
Offer details and availability may vary by cardholder. Just login to your American Express account(s) to see if you are eligible to add this offer to your card(s).
Delta currently charges:
- $30 processing fee per transfer transaction
- $0.01 per mile transferred
So, for example, transferring 10,000 SkyMiles would normally cost $130 in fees: $30 plus $100 for the miles themselves. With this Amex Offer, you can transfer up to 30,000 SkyMiles for free.
Important Terms
- Offer only valid on the payment of per transaction Processing Fees and Rate per mile fee(s) per eligible Transfer transaction up to $330 total when you transfer Delta miles to another Delta SkyMiles account using the Delta Miles Transfer program online only at US website delta.com/marketplace/transfer-miles.
- Offer is not valid on buying, gifting or donating Miles, and any other fees associated with those programs.
- Excludes all other purchases made through Delta.
- Transfer Miles may only be transferred and received by SkyMiles accounts that have been established for at least 10 days and have earned at least one automatically posted mile since enrolling in the SkyMiles program.
Purchases must be made in USD, and offer is only valid on purchases made directly with the merchant. Offer not valid on purchases made using third parties, such as resellers, delivery services, or other intermediaries.
Guru’s Wrap-up
This is a pretty niche offer, but it can save a meaningful amount if you were already planning to move SkyMiles between accounts.
Delta’s transfer fees are usually expensive enough that transferring miles rarely makes sense on its own. But getting up to $330 back changes the math considerably, especially for someone who needs to consolidate miles into another account for a specific redemption.
Just remember that this does not cover Membership Rewards transfers to Delta. It only applies when transferring existing SkyMiles from one Delta account to another.
This would all be much easier and user friendly if Delta didn’t charge for transfers at all.
HT: Anki in Danny Deal Guru Facebook Group
How much money required to start trading? #cryptocurrencytrading #binance #trading
How much money required to start trading? #cryptocurrencytrading #binance #trading crypto trading, Binance, Binance trading,spot trading
source
Pay As You Earn (PAYE): How It Works And What Happens When It Ends In 2028
Pay As You Earn (PAYE) is a federal income-driven repayment plan that caps your monthly student loan payment at 10% of your discretionary income and forgives whatever is left after 20 years of payments. It has been one of the two cheapest ways to repay federal student loans since 2012, and for borrowers with high balances relative to income it still is.
It’s also going away. The One Big Beautiful Bill Act eliminates PAYE and Income-Contingent Repayment (ICR) no later than July 1, 2028, and anyone who took out a new federal loan on or after July 1, 2026 already lost access.
The short answer for current PAYE borrowers: stay put for now, figure out whether your next plan is IBR or RAP based on when you first borrowed, and don’t let the Department of Education make that choice for you in 2028.
Here’s how PAYE works today, who can still use it, how the payment math compares to the newer plans, and what to do before the plan ends.
Table of Contents
Which Loans Does The PAYE Program Apply To?
Who Is Eligible For PAYE?
How Does PAYE Work?
How to Apply For PAYE
PAYE Is Ending: What Happens On July 1, 2028
PAYE Vs. IBR Vs. RAP: Where Should PAYE Borrowers Go?
Is The PAYE Program Worth It?
Frequently Asked Questions About PAYE
Which Loans Does The PAYE Program Apply To?
PAYE is a Direct Loan program, so only loans made under the William D. Ford Federal Direct Loan Program qualify outright. Older loan types can get in through a Direct Consolidation Loan, but only if that consolidation was disbursed before July 1, 2026.
Loans eligible for PAYE:
- Public Service Loan
- Direct Subsidized Loan
- Direct Unsubsidized Loan
- Direct PLUS Loans made to graduate or professional students
- Subsidized Federal Stafford Loans (if they have been consolidated)
- Unsubsidized Federal Stafford Loans (if they have been consolidated)
- Federal Perkins Loans (if they have been consolidated)
- FEEL PLUS Loans made to graduate or professional students (if they have been consolidated)
- FFEL Consolidation Loans that did not repay any PLUS loans made to parents (if consolidated)
- Direct Consolidation Loans that did not repay any PLUS loans made to parents (if consolidated
Parent PLUS loans are not eligible, and neither is a Direct Consolidation Loan that repaid a parent PLUS loan. The old “double consolidation” workaround that got some parents into PAYE required a second consolidation disbursed before July 1, 2026, so that door is closed. Parents with consolidated PLUS loans should read our Parent PLUS repayment options instead; their path runs through ICR and IBR, not PAYE. Defaulted loans can’t use any income-driven plan until they’re rehabilitated or consolidated.
Who Is Eligible For PAYE?
You have to pass three tests: the new-borrower test, the payment test, and the no-new-loans test. The first two have been the same since 2012. The third arrived on July 1, 2026, and it’s the one that catches people who consolidated or went back to school this year. Our income-driven repayment overview compares all four plans’ eligibility side by side.
The new-borrower test. You must have had no outstanding balance on any Direct Loan or FFEL Program loan when you received a Direct or FFEL loan on or after October 1, 2007, and you must have received a Direct Loan disbursement (or a Direct Consolidation Loan based on an application) on or after October 1, 2011. Consolidating doesn’t reset the first part. If you had a 2005 Stafford loan still open when you borrowed in 2010, you’re not a new borrower for PAYE even if you consolidate everything today. Borrowers in that position are the ones our IBR explainer was written for.
The payment test. Your PAYE payment, calculated from your income and family size, has to be less than what you’d pay on the 10-year Standard plan. In practice that means your federal loan balance is larger than your annual discretionary income, or close to it. This is also why PAYE has an income cap of sorts, covered below.
The no-new-loans test. If you received any new Direct Loan, including a new Direct Consolidation Loan, on or after July 1, 2026, you can’t use PAYE, IBR, or ICR, even if you were enrolled before. Your loans get moved to the Tiered Standard plan, and your only income-driven option is the Repayment Assistance Plan. That rule applies to the whole account, not just the new loan.
Is There An Income Limit For PAYE?
There’s no dollar cap on income. PAYE looks at your income relative to your debt: if 10% of your discretionary income comes out lower than the 10-year Standard payment, you qualify. Once you’re in, your payment can never go above the 10-year Standard amount, no matter how much your income rises. That cap is the main reason high earners with large graduate balances chose PAYE over the plans that weren’t capped, and it’s a feature RAP doesn’t have.
Can New Borrowers Still Enroll In PAYE?
This is the murkiest question on the page, so here is exactly what the sources say. StudentAid.gov’s OBBBA page says there is no restriction on enrolling in IBR, ICR, or PAYE on or after July 1, 2026 as long as you haven’t received a new loan since then. The regulation text at 34 CFR 685.209, as republished in the Department’s May 1, 2026 final rule, still carries language limiting PAYE to borrowers who were repaying under the plan on July 1, 2024 and barring re-enrollment for anyone who left. We covered that conflict in May, and it hasn’t been resolved publicly.
NASFAA’s repayment-plan chart and several servicer-facing sources add a third date: PAYE enrollment closes July 1, 2027, a year before the plan itself ends. If you’re eligible and PAYE is the right plan for you, apply now rather than testing which version of the rule your servicer follows. If your servicer denies the application, ask for the regulatory basis in writing and file a complaint with the FSA Ombudsman if the answer doesn’t cite a rule.
How Does PAYE Work?
PAYE sets your payment at 10% of your discretionary income, recalculated once a year, and forgives any remaining balance after 240 qualifying monthly payments (20 years). Payments on PAYE count toward Public Service Loan Forgiveness, so public servants can reach tax-free forgiveness after 120 payments instead. Months spent on IBR, ICR, SAVE, or the 10-year Standard plan before you joined PAYE count toward the 240, and our forgiveness timeline explainer walks through how the counting works.
How Your PAYE Payment Is Calculated
Discretionary income for PAYE is your adjusted gross income minus 150% of the federal poverty guideline for your family size and state. For 2026 the guideline in the 48 contiguous states is $15,960 for one person, $21,640 for two, $27,320 for three, and $33,000 for four, adding $5,680 per additional person; Alaska and Hawaii run higher. Your AGI is line 11 of your Form 1040, so pre-tax 401(k) and HSA contributions lower your payment.
Two examples, using 2026 numbers:
- Single, AGI $60,000. 150% of $15,960 is $23,940. Discretionary income is $36,060. Ten percent is $3,606 a year, or about $300 a month. On RAP the same borrower pays 6% of total AGI, $3,600 a year, also $300 a month.
- Family of three, AGI $75,000. 150% of $27,320 is $40,980. Discretionary income is $34,020. Ten percent is $3,402 a year, or about $284 a month. On RAP, that borrower pays 7% of AGI minus $50 per dependent per month, about $337 a month.
The pattern holds broadly: PAYE and RAP land close together for single borrowers in the $50,000–$70,000 range, PAYE wins for families and lower earners, and RAP’s 30-year term means far more total payments for anyone who won’t pay off before forgiveness. Run your own numbers in our RAP calculator before you assume either answer.
PAYE Student Loan Calculator
Here’s a simple PAYE student loan calculator to estimate your payment.
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$
48 contiguous states or D.C.
Alaska
Hawaii
$
%
Passes the PAYE payment test
$300 per month
Your estimated PAYE payment for the next 12 months.
| 150% of the poverty guideline (family of 1) | $23,940 |
| Discretionary income (AGI minus that amount) | $36,060 |
| 10% of discretionary income, per year | $3,606 |
| 10-year Standard plan payment (your cap) | $681 |
Estimate only. Uses the 2026 HHS poverty guidelines and PAYE’s 10%-of-discretionary-income formula; your servicer’s figure will differ if your income documentation, family size, or loan balance differs. PAYE is eliminated no later than July 1, 2028. Compare your number against RAP with our RAP calculator.
(function(){
var root=document.getElementById('tci-paye-calc'); if(!root) return;
var FPL={ '48':{base:15960,step:5680}, 'AK':{base:19950,step:7100}, 'HI':{base:18360,step:6530} }; // 2026 HHS guidelines, person 1 and each additional
var $=function(id){return root.querySelector('#'+id);};
var els={agi:$('tp-agi'),fam:$('tp-fam'),state:$('tp-state'),bal:$('tp-bal'),rate:$('tp-rate'),newloan:$('tp-newloan'),oldbal:$('tp-oldbal'),parent:$('tp-parent')};
var out={status:$('tp-status'),monthly:$('tp-monthly'),lead:$('tp-lead'),famout:$('tp-famout'),fpl:$('tp-fpl'),disc:$('tp-disc'),annual:$('tp-annual'),std:$('tp-std'),flags:$('tp-flags'),note:$('tp-note')};
function money(n){ return '$'+Math.round(n).toLocaleString('en-US'); }
function guideline(size,st){ var g=FPL[st]||FPL['48']; size=Math.max(1,Math.min(99,Math.round(size)||1)); return g.base+g.step*(size-1); }
function standardPayment(bal,ratePct){ var r=(ratePct/100)/12, n=120; if(bal<=0) return 0; if(r0 ? paye 0 ? money(std) : '—';
out.flags.innerHTML=flags.map(function(f){return '
out.status.className="tp-status";
if(blocked){
out.status.classList.add('tp-bad'); out.status.textContent="Not eligible for PAYE";
out.monthly.innerHTML=money(paye)+' per month would be the PAYE formula';
out.lead.textContent="Based on the box you checked, PAYE isn’t available to you. The formula result is shown for comparison only.";
out.note.innerHTML='Amended IBR uses the same 10% formula for borrowers whose first loan came on or after July 1, 2014 (15% for earlier borrowers). See RAP vs. IBR.';
} else if(!passes){
out.status.classList.add('tp-warn'); out.status.textContent="Fails the PAYE payment test";
out.monthly.innerHTML=money(std)+' per month (10-year Standard)';
out.lead.textContent="Your 10%-of-discretionary-income figure ("+money(paye)+') is not below the 10-year Standard payment, so you can’t enroll in PAYE at this income. If you’re already on PAYE, your payment is capped at the Standard amount.';
out.note.innerHTML='Lower AGI (a raise in pre-tax 401(k) or HSA contributions, or married filing separately) can change this. See the married filing separately math.';
} else {
out.status.classList.add('tp-ok'); out.status.textContent="Passes the PAYE payment test";
out.monthly.innerHTML=money(paye)+' per month';
out.lead.textContent= paye===0 ? 'Your discretionary income is $0, so your PAYE payment is $0. Those months still count toward forgiveness.' : 'Your estimated PAYE payment for the next 12 months. Recertify each year; it moves with your income and family size.';
var pct = bal>0 ? Math.round(paye/std*100) : null;
out.note.innerHTML= pct!==null ? 'That’s about '+pct+'% of the 10-year Standard payment. Payments on PAYE never rise above the Standard amount, even if your income does.' : 'Enter your loan balance to see the 10-year Standard cap.';
}
}
['input','change'].forEach(function(ev){ root.addEventListener(ev,calc); });
calc();
})();
How to Apply For PAYE
Apply online at StudentAid.gov using the income-driven repayment application; the Department says it takes most people about 10 minutes. You’ll choose PAYE specifically rather than letting the servicer pick the lowest payment, because in 2026 “lowest payment” can route you into RAP, and months on RAP don’t count toward PAYE or IBR forgiveness if you switch back.
The application pulls your income from the IRS with your consent, so you no longer need to upload a tax return in most cases. If your income has dropped since your last return, you can submit alternative documentation such as a recent pay stub, and if you have no income you state that on the form. Paper applications still exist through your servicer. If you have more than one federal servicer, each one needs the application. Beware of companies that charge to “enroll” you; the FTC shut down Ameritech Financial, the company a reader asked about in the comments below, in 2020, and our student loan scam checklist covers the warning signs.
Alert: Enrollment in PAYE will close on July 1, 2027. If you want to enroll in PAYE, you must do so prior to that date.
Once You Are Approved
Your PAYE payment isn’t fixed. It’s recalculated every year when you recertify your income and family size, and you can recertify early any time your income drops or your family grows. Recertification happens through the same StudentAid.gov application, and most borrowers can now approve automatic annual recertification from IRS data so nothing lapses. Our capitalized interest explainer covers what happens to unpaid interest along the way.
If you miss the recertification deadline, you stay on PAYE, but your payment resets to the 10-year Standard amount based on what you owed when you entered the plan. You can get back to an income-based payment by submitting updated income, as long as you still qualify. Under the regulation, unpaid interest on PAYE capitalizes when your payment is no longer based on income or when you leave the plan, which is one more reason to recertify on time rather than drift.
The government also pays the unpaid interest on your subsidized loans for your first three consecutive years on PAYE if your payment doesn’t cover it. Periods of economic hardship deferment don’t count against the three years; other deferments and forbearances do. That subsidy is smaller than RAP’s full interest waiver, which is the one place RAP is clearly more generous.
PAYE Is Ending: What Happens On July 1, 2028
The One Big Beautiful Bill Act, signed July 4, 2025, ends the PAYE and ICR plans no later than July 1, 2028. Congress replaced them with the Repayment Assistance Plan, which launched July 1, 2026, and kept IBR as the only legacy income-driven plan for borrowers whose loans all predate July 2026. SAVE ended on July 1, 2026, so the plan the old version of this page told you to fall back on is already gone.
As of this writing, the Department of Education’s guidance says only that PAYE and ICR “will be eliminated no later than July 1, 2028” and that it is “working on a transition plan for borrowers who are enrolled in those plans.” No notices have gone out, no deadline has been set for individual borrowers, and no default plan has been announced.
What The End Of PAYE Will Look Like
Nobody at the Department has published the mechanics yet, so here is what we expect based on our conversations with a source at the loan servicers and on how the SAVE shutdown was run this summer. The servicers expect the PAYE wind-down to look very similar to SAVE’s.
Notices start in late 2027 or early 2028. Expect a series of reminder notices first, then deadline notices with a date by which you have to choose a plan. Borrowers will very likely be moved out in tranches rather than all at once, so your deadline may land weeks or months before July 1, 2028 depending on which group your servicer puts you in. For a sense of the cadence, SAVE borrowers got 90 days from their servicer’s notice to pick a plan, and the ICR page tracks the same clock for that plan’s borrowers.
The default for borrowers who don’t act is the open question. Servicers we’ve spoken to expect borrowers who miss their deadline to be placed on the Standard repayment plan, which is what happened to SAVE borrowers who didn’t choose. NASFAA’s chart of the new rules says PAYE borrowers land in RAP instead, with ICR borrowers moved to IBR because RAP can’t take parent PLUS consolidations. Either outcome is worse than choosing: the Standard plan can multiply your payment, and RAP starts a 30-year clock and, if you later want IBR, doesn’t count those months. Act on the first deadline notice, not the last.
What doesn’t change: your payment count. Payments you’ve made on PAYE count toward forgiveness on IBR and toward RAP’s 360-payment clock, and toward PSLF on any of them. The clock resets only in one direction: if you go to RAP and then come back to IBR or PAYE, the RAP months don’t count toward the older plans’ forgiveness unless your RAP payment was at least the 10-year Standard amount. Our RAP vs. IBR comparison explains that rule with examples.
PAYE Vs. IBR Vs. RAP: Where Should PAYE Borrowers Go?
Start with the year you first borrowed. That single fact decides whether IBR is a clone of PAYE or a worse plan, and the answer is spelled out in our RAP vs. IBR decision tree.
You first borrowed on or after July 1, 2014. Amended IBR gives you the same 10% of discretionary income and the same 20-year forgiveness as PAYE, and the law removed the old partial-financial-hardship requirement, so you qualify regardless of your debt-to-income ratio. Moving to IBR changes nothing about your monthly bill. Stay on PAYE until your servicer’s transition notice arrives, then choose IBR, unless RAP’s payment is meaningfully lower for your family size and you’re comfortable with the 30-year term.
Your first loan came between October 1, 2011 and June 30, 2014. IBR for you is 15% of discretionary income with forgiveness after 25 years. That’s a 50% higher payment and five more years than PAYE. Stay on PAYE as long as the plan exists, keep recertifying, and compare IBR against RAP in 2028 rather than switching early. For most borrowers in this group, RAP’s 1–10% of total AGI beats a 15% IBR payment at incomes under roughly $80,000, and the RAP calculator will show you where your crossover is.
You’re pursuing PSLF. All three plans qualify, and RAP months count toward PSLF even though they don’t count toward IBR forgiveness. Pick whichever plan produces the lowest payment for the years you have left, since a lower payment means more forgiven at 120. Our PSLF qualification breakdown covers the employer and payment tests.
You’re married. PAYE and IBR use your joint AGI if you file jointly and your income alone if you file separately, which is why married filing separately has been a common PAYE strategy. RAP uses combined AGI too when you file jointly, with one prorated payment across both spouses’ loans. The tax cost of filing separately grew under the 2025 tax law, so run both sides before you assume the loan savings win.
Is The PAYE Program Worth It?
For a borrower who qualifies, PAYE is still the best legacy plan available: the 10% formula, the 20-year term, and the Standard-plan cap together beat IBR for pre-2014 borrowers and beat RAP on term length for everyone. The trade-off is total cost. A lower payment over more years means more interest, and the cheapest path over 20 years is only cheap if you actually reach forgiveness.
Which brings up the tax bill. Federal income-driven forgiveness became taxable again on January 1, 2026 when the American Rescue Plan’s exclusion expired, so a balance forgiven under PAYE, IBR, ICR, or RAP is added to your income in the year it’s discharged. Borrowers who reached 240 payments by December 31, 2025 keep tax-free treatment even if the Department processes the discharge later, under the settlement in the American Federation of Teachers lawsuit that restarted forgiveness processing in late 2025. Everyone else should estimate the tax bomb now and check whether your state taxes forgiveness too. Our explainer on taxes and student loan forgiveness covers the insolvency exclusion for borrowers who can’t cover the bill.
Frequently Asked Questions About PAYE
How do I apply for PAYE?
Complete the income-driven repayment application at StudentAid.gov, select PAYE by name, and authorize the IRS data pull. The Department says the application takes about 10 minutes. Paper applications go through your servicer. There is no fee, and any company charging one is on our scam list.
Do I qualify for PAYE?
You qualify if you’re a new borrower as of October 1, 2007 with a Direct Loan disbursement on or after October 1, 2011, your calculated PAYE payment is less than the 10-year Standard amount, and you haven’t received any new federal loan or consolidation on or after July 1, 2026. Parent PLUS loans and consolidations that include them are excluded. The eligibility section above has the details.
Is there an income limit for PAYE?
No fixed limit. Eligibility depends on your payment coming in under the 10-year Standard amount, and once enrolled your payment is capped there permanently. High earners with large balances can stay on PAYE; they just pay the cap.
What happens to PAYE in 2028?
The plan is eliminated no later than July 1, 2028. Servicers expect notices to start in late 2027 or early 2028, with reminders, then deadlines, and borrowers moved out in tranches. Where you land if you don’t choose is unsettled: servicers expect the Standard plan, NASFAA’s chart says RAP. Your PAYE payments count toward IBR or RAP forgiveness either way, so choose before the deadline.
Does PAYE count toward PSLF?
Yes. PAYE is a qualifying repayment plan for Public Service Loan Forgiveness, and payments continue to count until the plan ends.
What if I don’t recertify on time?
You stay on PAYE, but your payment jumps to the 10-year Standard amount and unpaid interest can capitalize. Submit updated income to get back to an income-based payment. Turning on automatic recertification at StudentAid.gov avoids the problem; see our capitalized interest explainer for what a lapse costs.
Is PAYE forgiveness taxed?
Federally, yes, for balances forgiven on or after January 1, 2026, unless you reached 240 payments by December 31, 2025. Some states tax it too. Use the tax bomb calculator to size the bill.
Editor: Clint Proctor
Reviewed by: Chris Muller
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Boeing Landed a $131 Billion F-15 Order. Here’s What It Means for Lockheed Martin.
One need not be an avionics expert to understand that military aircraft are described in generational terms. That lesson was effectively taught in the 2022 blockbuster Top Gun: Maverick, where the term “fifth generation,” or “fifth gen,” was used to describe unidentified enemy fighter aircraft.
Fear not, because the U.S. is the leader in the development of fifth-generation fighter jets, but those planes are expensive to produce, and some older planes are still plenty useful in combat. Hence, Boeing (BA +1.78%) recently won a contract worth as much as $131.2 billion to produce more of and enhance existing planes in the Air Force’s F-15 fleet.
Boeing won a big F-15 contract, but it’s relevant to Lockheed Martin investors, too. Image source: Getty Images.
The original F-15 Eagle first flew in 1972. Still, the current iteration is considered fourth-generation or fourth-generation-plus, implying that new models and upgrades to current aircraft are akin to “generation 4.5.”
Not to be lost in the F-15 shuffle are potential implications for Lockheed Martin (LMT -1.14%). Some investors may think that Boeing and Lockheed are in a dogfight, but the latter can benefit from the former’s big contract win. Here’s why.
Don’t forget the Fighting Falcon
Officially dubbed the “Fighting Falcon” and colloquially known as the “Viper,” the Air Force’s F-16 is produced by Lockheed Martin in South Carolina with new models shipped exclusively to foreign customers. However, the U.S. is showing commitment to the F-16.
While the Air Force has said “No thanks” to some Lockheed products, the branch of the military announced earlier this year it’s shelling out $438 million for an F-16 upgrade cycle for 48 jets. Obviously, that’s nowhere near the size of the Boeing F-15 agreement, but the point is the Air Force still sees value in the F-16, and it’s willing to put its money where its mouth is to that effect.
As it should. Perhaps Lockheed is “talking its own book.” Still, the manufacturer describes the F-16V as the most technologically advanced version of that jet, adding to its legacy “as the world’s foremost combat-proven 4th Generation multi-role fighter aircraft.”
Today’s Change
(-1.14%) $-5.89
Current Price
$512.21
Key Data Points
Market Cap
$118BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Day’s Range
$511.03 – $519.68
52wk Range
$437.25 – $692.00
Volume
1.1K
Avg Vol
1.1M
Gross Margin
12.66%
Dividend Yield
2.69%
The point is that global defense budgets are soaring, and the White House is requesting fiscal 2027 defense outlays of $1.5 trillion, implying a robust fighter jet upgrade cycle that could benefit multiple manufacturers, not just Boeing.
Lockheed may be the safer bet
Boeing is a well-documented turnaround story, and much of that turnaround needs to occur in its commercial aircraft unit. Undoubtedly, there are signs of progress on that front, as deliveries are at their highest level in eight years. Still, passenger jet issues aren’t material to Lockheed investors because the company isn’t involved in that space.
So it’s not a stretch to say that of these two stocks, Lockheed is the cleaner, potentially safer story due to its focus on defense contract procurement. That’s not a guarantee of share price appreciation, but it is confirmation that Lockheed isn’t dependent on the often cyclical nature of commercial aircraft demand and upgrade trends.
Of note to long-term investors considering Lockheed is that the company very much has its hands in the “fifth gen” fighter-jet pie. Interestingly, Boeing and Lockheed work together in the production of the F-22 Raptor, but let’s focus on the F-35 Lightning, of which Lockheed is the sole producer.
That aircraft is widely considered the most technologically advanced fifth-generation combat aircraft in the world, and because technology is, well, always advancing, the need to stay on top of F-35 upgrades is persistent and potentially material to Lockheed’s top and bottom lines. We’re not talking about small fixes and “tinkering” here.
Modernizing this jet to keep it on the cutting edge of technology is one reason why the program’s procurement cost is now estimated at $536.2 billion, or $51 billion more than the 2023 forecast. That probably isn’t what government bean counters want to hear, but with air superiority a must-have for governments worldwide, Lockheed Martin is in the right place at the right time.
Mortgage Rates Could Top Out at 8.88% If History Repeats
If you’ve ever looked at a mortgage rate chart, you’ll see that mortgage rates experienced a double-top in the early 1980s.
That’s when mortgage rates hit all-time highs, with the 30-year fixed briefly rising above 18%.
Those are the rates the Boomers always like to bring up when today’s young home buyers complain that rates are too high.
Of course, it’s not apples-to-apples because home prices were much lower then, as was the cost of living.
But if history were to repeat, with a second top this cycle, it’d put the 30-year fixed just shy of 9%.
Mortgage Rates Peaked in 1981
During the week of October 9th, 1981, the 30-year fixed hit its all-time high of 18.63%, per Freddie Mac PMMS data., as seen in this chart from FRED.
But that was actually the second peak of what was a really tough period for inflation and interest rates in the early 1980s.
There was a prior peak of 16.35% seen in mid-April of 1980, before mortgage rates took a breather and looked to be heading down.
If you’re one of those people who believes that history repeats or “rhymes,” you might think we’re headed for a second peak.
So far this cycle, mortgage rates have taken a similar path, rising sharply before coming back down and looking like the worst was over. Then climbing again…
Current Mortgage Rate Peak Is 7.79%
We hit 7.79% at our peak this cycle back in late October 2023, then saw rates drift lower for years after that.
Before the war kicked off in early March, we were back around 6% and even slightly lower.
But that was short-lived, and since then mortgage rates have been surging higher again.
So much so that they’re now the highest they’ve been since early 2024.
Could they make a run toward those late-2023 mortgage rates next? It’s certainly not out of the question and the reason would be fairly similar.
A second wave of inflation, this time driven by the Middle East conflict and the surging cost of oil.
With a massive AI build-out thrown in as well that’s making the economy run hot.
A Similar Move Would Put Us Just Below 9% Mortgage Rates
Now assuming it did happen, and mortgage rates hit a new, higher second peak that was proportional to the 1980s move, the 30-year fixed would land around 8.88%.
Of course, rates could go even higher than that since Freddie Mac’s weekly survey data often misses bigger spikes.
So you might see a 9-handle on daily rate indexes like Mortgage News Daily.
But again, that’s only if this actually transpires and history repeats perfectly.
The somewhat good news is because mortgage rates are so much lower today, the cycle high wouldn’t be anywhere near those 1980s mortgage rates.
We wouldn’t go back to high double-digit rates again, but we would hit new highs for the current cycle.
And that would likely lead to even fewer home sales, which are already bouncing around 30-year lows.
But Would It Be Followed By a Housing Boom?
So it’d be even more bad news for the housing industry, real estate agents, home builders, loan officers, mortgage brokers, etc.
But, it’d also probably be relatively short-lived, and followed by a sharp decline, as parabolic moves higher tend to run out of steam quickly.
While the 30-year fixed was indeed above 18% back then, it fell to 12% about a year and a half later. Talk about some big moves.
In other words, the high mortgage rates didn’t sustain, and relief came pretty swiftly.
That means the silver lining here, even if mortgage rates do rise close to 9% in a second wave scenario, is that it would eventually lead to a period of low rates.
And a major uptick in activity for an industry that has been struggling for years.
Read on: Compare different mortgage rates with my mortgage rate calculator.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 20 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
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