Despite reforms that are making Federal Housing Administration loans more expensive and an FHA bureaucracy that is understaffed and supported by ancient computer systems, an extraordinary number of home buyers?nearly nine out of ten?are counting on FHA to finance their next purchase, according to a new survey by a website popular with first-time buyers.
Of the 12,000 readers of the Home Buying Institute website last month, some 87 percent of those who responded to the survey said they were planning to use an FHA loan to finance their home purchase.
By contrast, FHA accounts for about a third of all purchase loans and between 40 and 50 percent of loans to first-time buyers.
Of the HBI readers who plan to use FHA, 53.8 percent said they wanted to use an FHA home loan for the smaller down payment, 19.2 percent said they thought the overall qualification process would be easier, 13.5 percent said they previously had trouble qualifying for a conventional loan, 7.7 percent said they had low credit scores and 5.8 percent felt their income was too low to qualify for a regular loan.
Of those who said they did not plan to use an FHA loan, 57.1 percent said they did not know enough about the FHA program; 28.6 percent said they had excellent credit and enough saved for a down payment; 14.3 percent said they tried to use an FHA loan before, but had been turned down.
The survey did not inform readers of the pending changes in FHA loans., including higher premiums for mortgage insurance and lower seller concessions. However, the HBI website, published by Cornett Communications, a real estate publishing company, provide information on reforms elsewhere.
At the National Association of Real Estate Editors annual conference last week, former FHA Commissioner Brian Montgomery said that the agency is servicing 30 percent of the market with virtually the same level staffing that it had when it served only 3.5 percent of the mortgage market a few years ago and computer systems that are twenty to thirty years old, (see Record Loan Demand Strains FHA’s Capacity).