Fewer First-Time Home Buyers Using FHA Mortgages

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The Federal Housing Administration (FHA) backed 480,000 mortgage loans issued to first-time home buyers in the 2014 fiscal year according to data from the Department of Housing and Urban Development from October 2014. The first-time home buyer loans accounted for 81% of all home loans secured by the FHA. Even though the FHA’s main focus is on this group of buyers, their use declined considerably over the last 4 years. There were 46% fewer FHA loans issued to first-time home buyers in 2014 compared to 2010. The drop from 2000 is 30% .

The share of FHA mortgages in the home loan market dropped nearly two times from 2010 to 2014. Four years ago, it was 40%. Now it is 21.9%. The shrinking of the market share of the FHA-backed loans coincided with an increase in their fees. They rose from 0.55% in 2010 to 1.35% during the same period.

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The decrease in the share of FHA loans coincided with low demand for home purchase loans in general. In 2013, 3 million new home purchase loans for single-family homes were originated compared to 2.9 million in 2010. During the period from 1996 to 2001, 5.5 million home purchase loans were originated on average compared to 3.1 million in the period from 2008 to 2013.

The Department of Housing and Urban Development informed the public that the FHA had not taken any decisions regarding the fee premiums charged to borrowers. The current legal provisions, will enable HUD to charge lenders a fee for administrative support. It is estimated that $30 million will be collected through the charging of this fee. The funds will be used for improved single-family home programs, which provide counselling and support with the payment of monthly mortgage installments. The support for these new programs will cost approximately $40 for every $100,000 borrowed.



Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info

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