The most recent Millennial Tracker report released from Ellie Mae indicates that the mortgage market FHA loans are on the rise – and will likely continue to be – as increasing numbers of Millennials become first time homebuyers.
Millennials, who make up a growing number of homebuyers in the U.S., are leveraging FHA loans to maximize the advantages of lower down payments and lower average FICO score requirements. Consequently, FHA loans, fully 35% of all loans closed in January, rose slightly from 34% reported in December of last year.
“As the purchase market heats up, we will continue to watch the FHA purchase trend amongst Millennials,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy. Interestingly, the Millennial Tracker report of last month revealed that single female Millennials are the most popular FHA loan users.
FICO scores took a slight dip in January, dropping to 724 from the three-month peak of 726 during the latter part of 2016. Theory implies that this could indicate loosening credit standards. In the purchase market, applicants showed an average FICO score of 748 on conventional mortgage loans, 690 for FHA loans and 734 for VA loans.
The total average time to close loans edged upward from 48 days reported in November of last year to 49 days reported in January for purchases of all loan types. Refinances closed slower, coming in at 58 days on average while purchases closed in 46 days on average.