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Lately, millennials in Washington State and across the country have been choosing conventional home loans more than FHA-insured mortgage loans. This article will explain why.
A recent industry report showed that the majority of all closed loans by millennial borrowers are conventional (or non-FHA) mortgages. That was the highest percentage in two years, signaling a temporary shift in loan preference among this age group.
The mortgage software company Ellie Mae maintains a “Millennial Tracker” that monitors home loan trends for this particular demographic. For tracking purposes, they define a millennial as people born between the years of 1980 and 1999.
The company’s latest report revealed that roughly three-quarters of millennials (74%) who took out a mortgage to buy a house in 2020 opted for a conventional loan, as opposed to using the FHA program. Compare that to 21% of millennials who took out an FHA loan to make a home purchase, and 2% for VA loans.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
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In the past, the FHA program was more widely used among home buyers in this particular age group. The Federal Housing Administration’s mortgage insurance program offers some noteworthy benefits for borrowers, including a relatively low down payment (3.5) and flexible qualification criteria.
Lately, however, it appears that more millennials in Washington State and nationwide are turning to conventional home loans. Of course, this trend could reverse itself in the months ahead.
The reasons for this recent shift are unclear. A senior executive with Ellie Mae suspects it might be because the requirements for a conventional loan have eased over the years, allowing more millennial borrowers to qualify for financing.
“Historically we have seen Millennials look to FHA programs to help address their homebuying needs,” said Joe Tyrrell, an executive vice president at Ellie Mae. “But in the past two months, FHA loans have represented less than 30 percent of the total loans for Millennials. We view this as an indication that more Millennials are qualifying for conventional mortgages.”
Are you looking to apply for a Washington mortgage? If so, we can help. Sammamish Mortgage has been helping Washington home buyers and homeowners with their mortgage financing needs since 1992. We are a local, family-owned company based in Bellevue and provide mortgage programs to borrowers all over WA, OR, ID, and CO. Please contact us if you have questions about getting a mortgage loan.
There are a few key differences between VA, FHA, and USDA loans, in addition to each loan type’s eligibility requirements.
Military borrowers have three major loan programs to choose from when they want to secure a home loan: FHA, VA, and conventional loans. Read on to find out more and to check out our loan limits tool.