FHA loans are a popular financing option among home buyers in Washington and Oregon, two of the states we serve. According to an Urban Institute report, first-time home buyers accounted for 79.4% of FHA loan originations in January 2026.
The Urban Institute (an economic think tank based in Washington, D.C.) published a report about first-time home buyers, mortgage lending, and related topics. One of the key insights relates to FHA loans.
A lot of first-time home buyers in Washington and Oregon still favor the Federal Housing Administration’s mortgage insurance program. Nationally, first-timers accounted for 79.4% of FHA loan originations in January 2026.
Definition: An FHA loan is originated within the private sector, like other types of mortgages. But it’s also insured by the federal government. This insurance protects lenders from losses relating to borrower default. As a result of this backing, the qualification criteria for FHA loans can be more “forgiving” than other mortgage programs.
The Federal Housing Administration (FHA) continues to serve the first-time homebuyer market, with first-time buyers accounting for 79.4% of FHA loan originations in January 2026.
Based on this report, it’s clear that a lot of first-time buyers in Washington and Oregon prefer to use FHA loans. But why? What is it about this program that attracts first-timers.
Over the last few years, conventional loans have started to compete with the FHA program in the low-down-payment department. Thanks to policy changes made by Fannie Mae and Freddie Mac, eligible first-time buyers in Washington and Oregon can now qualify for a conventional loan with a down payment as low as 3%.
FHA and conventional loans might be competitive when it comes to down payments. But there are some key differences when it comes to mortgage insurance.
Borrowers who use a conventional home loan with a low down payment usually have to pay for private mortgage insurance (PMI). But the insurance policy can be canceled later on when the homeowner’s equity rises to a certain level. With the FHA program, on the other hand, most buyers have to pay mortgage insurance for as long as they keep the loan.
Related: How FHA insurance premiums work
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. If you’re comparing FHA and conventional options as a first-time buyer, visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
Many first-time buyers choose FHA loans because the program offers a low down payment option and more flexible qualification standards than some other mortgage types. Urban Institute reported that first-time buyers accounted for 79.4% of FHA loan originations in January 2026.
No. FHA loans are widely used by first-time buyers, but they are not limited to them. The program remains especially popular with first-time buyers in Washington and Oregon because of its low down payment requirement and flexible credit and debt guidelines.
This program allows qualified borrowers to make a down payment as low as 3.5% of the purchase price or appraised value. That is one reason FHA financing remains attractive to many first-time buyers.
Both FHA and conventional loans can offer low down payment options. Eligible borrowers may qualify for a conventional loan with as little as 3% down, while FHA allows as little as 3.5% down. A key difference is mortgage insurance, because conventional private mortgage insurance can often be canceled later, while most FHA borrowers pay mortgage insurance for as long as they keep the loan.
An FHA loan may be a better fit when a borrower needs more flexible qualification standards. Buyers with less-than-perfect credit or a higher level of household debt often turn to FHA financing for that reason.
In most cases discussed here, FHA mortgage insurance stays in place for as long as the borrower keeps the loan. That is different from many low-down-payment conventional loans, where private mortgage insurance can usually be canceled once the homeowner reaches a certain equity level.
FHA financing can be more attractive when a buyer has less-than-perfect credit, a higher debt-to-income ratio, or both. The program is often considered more forgiving than some other mortgage options because the federal insurance reduces lender risk.
Specific disqualifying factors are not listed here, but the article explains that FHA loans generally have more flexible credit score and debt-to-income requirements than many other mortgage programs. Even so, borrowers still must meet lender and program qualification standards.
Qualification depends on lender and program standards, but FHA loans are often a strong option for borrowers in Washington and Oregon who want a low down payment and need more flexible credit or debt-to-income guidelines. The program is especially common among first-time buyers in those states.
Conventional loans have become more competitive by offering down payments as low as 3% for eligible borrowers. FHA loans remain competitive because many buyers value the program’s flexible qualification standards, especially when credit history or household debt could make conventional approval more difficult.
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