Millennial homebuyers took out larger FHA-backed mortgage loans in November, compared with the same period one year ago.
Twenty-six percent of closed loans to Millennials in November were for FHA loans, with an average loan size of $186,454, up from $178,862 in November 2017, and $170,167 in November 2016, according to the Ellie Mae Millennial Tracker. Comparatively, Conventional loans accounted for 69 percent of closed loans made to Millennial borrowers during the same period, with an average loan amount of $211,268. Additionally, two percent of loans were for Veterans Affairs loans and three percent were unspecified.
FHA loans were more likely to be used by borrowers to purchase a home (95 percent), with just five percent of these type of loans going toward a refinance. Among conventional loans, 88 percent were for purchases and 11 percent were for refinances.
“November data from the Millennial Tracker shows that Millennial borrowers are taking out larger FHA mortgages and spending more on a home than in the past,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “For example, the average home appraisal value based on closed FHA loans for November 2018 in the San Francisco region was $562,479 compared to $523,192 a year ago at this same time, and up from $438,694 in 2016. We are seeing that as inventory remains relatively slim, borrowers are not waiting to buy an affordable home and are instead increasing their loan amount to purchase what is available on the market.”
Across the U.S., borrowers are taking out much larger FHA loans compared with previous years (as the highlighted averages for major metropolitan areas demonstrate below):
| Market | Avg. Loan Amount (Nov. 2018) | Avg. FHA Loan Amount (Nov. 2018) | Avg. Home Appraisal Value (for FHA Loans) (Nov. 2018) | Avg. Loan Amount (Nov. 2017) | Avg. FHA Loan Amount (Nov. 2017) | Avg. Home Appraisal Value (for FHA Loans) (Nov. 2017) |
| San Francisco-Oakland-Hayward | $642,877 | $505,871 | $562,479 | $523,633 | $460,853 | $523,192 |
| Los Angeles-Long Beach-Anaheim | $479,362 | $442,569 | $479,091 | $442,015 | $389,031 | $425,517 |
| Boston-Cambridge-Newton, Mass./N.H. | $376,481 | $353,680 | $379,897 | $367,733 | $343,219 | $370,635 |
| Washington, D.C.- Arlington-Alexandria | $351,631 | $313,168 | $331,633 | $334,156 | $283,584 | $305,467 |
| Chicago-Naperville- Elgin |
$221,962 | $194,630 | $207,841 | $205,667 | $178,335 | $189,715 |
Additional takeaways from the survey are as follows:
- Men were listed as the primary borrower for 56 percent of FHA loans, women were listed on 35 percent, and nine percent were unspecified
- It took an average of 43 days to close both FHA and conventional loans across the country, compared to the average of 42 days for all loans
- In November, 89 percent of all loans closed by Millennials were for purchases, with just 10 percent for refinances
- Interest rates on all loans rose to 5.1 percent, the highest percentage point since Ellie Mae started tracking this data in 2016, up from 4.96 percent in October, and up from 4.17 percent a year ago
- The average FHA loan borrower FICO score was 680 and the average score for those who opted for conventional loans was 744.
