Millennials are becoming a powerhouse in the real estate market, accounting for 84 percent of closed loans in January. And they’re increasingly turning to Federal Housing Administration loans, those that offer low down payment options, to achieve homeownership. In January, 35 percent of millennials used an FHA loan, according to Ellie Mae’s Millennial Tracker.
“As the purchase market heats up, we will continue to watch the FHA purchase trend amongst millennials,” says Joe Tyrrell, executive vice president of Corporate Strategy for Ellie Mae. “It is not surprising to see millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. As more millennials enter the market, we expect to see the popularity of FHA loans continue to increase.”
The markets with the most millennial activity in January, based on closed loans, were Enterprise, Ala., and Owensboro, Ky., according to Ellie Mae’s tracker.
The average millennial FICO score in January was 724. Broken out, the average FICO score for a conventional loan was 748; 734 for VA loans; and 690 for FHA loans.