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In September 2019, the Department of Housing and Urban Development released a housing finance reform plan that proposes to refocus the FHA to its core mission. The report discusses the state of the housing market today, the volume and viability of FHA home loans.

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FHA Home Loan Facts and Figures

September 23, 2019 - In September, 2019, the Department of Housing and Urban Development released a housing finance reform plan that proposes to “refocus” the FHA to its “core mission.”

The report discusses the state of the housing market today, the volume and viability of FHA home loans, and a variety of other topics. It includes some very interesting facts and figures that may be useful to those who want to start the journey to home ownership but aren’t sure whether an FHA mortgage loan is the right one for them.

FHA Mortgages May Get You Into a House Faster Than Conventional Mortgages

The HUD report indicates that the FHA home loan program helps potential first-time home owners get into a house faster than other first-time buyers, at least when comparing FHA mortgages to conventional loans. Page eight of the HUD Housing Finance Reform Plan states, “This is FHA’s most important contribution to the American housing market”. 

How Much of the Market for First-Time Home Buyers Goes to FHA Home Loans?

First-time home buyers seem to favor FHA mortgages; according to the HUD report, “The share of FHA-insured purchase mortgage activity” for these first-time buyers goes from “between 75 percent in FY2011 and 83 percent in FY2018”.

What Would Happen if FHA Mortgages Just Went Away?

The HUD report claims that without the FHA home loan program, many low and moderate income house hunters who are buying real estate for the first time would not have access to affordable mortgages without the FHA.

Average FHA Home Loan Amounts, Debt Ratios

HUD reports that the “average” loan amount has increased steadily since 2011. It has moved up from $140k to over $180k in 2018. HUD states that this “has led to an increase in DTI ratios, as home prices generally have increased faster than wages”. DTI, as used here, stands for debt-to-income ratio, and the average debt ratio for FHA borrowers dropped to just over 40% in 2013 but has “steadily increased” in the five years after reaching this low, hitting over 43% by 2018. 

In some cases, home loans issued in 2018 were done so for borrowers with a debt ratio higher than 50%, and credit scores have “deteriorated” between 2010 and 2018.

FHA home loans are often more affordable, have a lower credit requirement for loan approval, and offer flexible options. Ask a loan officer today about how an FHA mortgage can help you get into the home you need.

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