More millennials going conventional, fewer FHA

PLEASANTON, Calif. – March 7, 2018 – According to the latest Ellie Mae Millennial Tracker, 67 percent of all closed loans by millennials were conventional – the highest percentage in two years. Conventional loans continued to be the most popular loan product, although women were slightly more likely to take advantage of FHA loans.

In January 2018, 66 percent of loans closed by women were conventional, while 32 percent were FHA. Another 1 percent had a VA loan and 1 percent were unspecified.

For men over the same time period, 68 percent were conventional, 27 percent FHA, 2 percent VA and 3 percent unspecified.

“Historically we’ve seen millennials look to FHA programs to help address their home buying needs, but in the past two months, FHA loans have represented less than 30 percent of the total loans for millennials,” says Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “We view this as an indication that more millennials are qualifying for conventional mortgages.”

Additional findings from the Ellie Mae Millennial Tracker

  • Purchases accounted for 81 percent of all closed loans to millennials, down from 84 percent the month before. Refinances crept up to 18 percent of all closed loans, having previously held steady at 15 percent since October 2017.
  • The average millennial borrower’s FICO score in January increased slightly to 723, up from 722 in December. The average FICO score for women was 725, while the average FICO score for men was 724.
  • It took millennial borrowers 45 days, on average, to close their loans, an uptick from 43 days in December. The average time for women to close a loan was 44 days compared to 45 days for men.
  • The top Metropolitan Statistical Areas (MSAs) for millennial women homebuyers in January included La Crosse-Onalaska, Wisc.-Minn.; St. Cloud, Minn.; and Green Bay, Wisc. Meanwhile, the top MSAs for Millennial men were located in the southeast and included Fairmont, W. Va., Owensboro, Ky., and Macon, Ga.

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