In 2024, FHA and VA loans represented a substantial portion of home purchases, accounting for 34% of the market, largely due to affordability challenges faced by first-time homebuyers. The share of government-backed loans has increased from less than 30% in 2022. The rising costs of rent and mortgage payments have prompted buyers to seek lower down payment options and higher debt-to-income ratios provided by these loans. Despite these trends, acceptance of government loans can vary significantly in high-cost markets, where conventional loans may still prevail.
As a result, more buyers are turning to products like Federal Housing Administration (FHA) loans, which accounted for 24% of primary home purchases in 2024.
Affordability is a real challenge right now, and with the fact that FHA and VA loans require a lower down payment, these types of loans are the bulk of what we are seeing in the market.
Both FHA and VA loans represented 34% of the market, up from less than 30% in 2022 and the highest share since late 2020.
High-cost markets may be less keen on accepting FHA or VA loans over their conventional counterparts.
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