Lack of affordability in housing is affecting not just how many people are buying homes but also the ways in which they are making their home purchase. According to data from housing market research platform John Burns Research and Consulting, high home prices and mortgage rates have had a severe effect on affordability, and that has caused more buyers to look for alternative mortgage options. Most commonly, buyers are turning to government-backed loans, such as loans from the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), to make homeownership a reality. In 2024, FHA loans accounted for 24% of purchases, while VA loans made up for 10% of purchases. Accounting for 34% of the marketplace together, this is up from 30% in 2022 and is at the highest point since late 2020.
Conforming loans—mortgages that meet Fannie Mae and Freddie Mac guidelines—made up only 60% of primary residence purchases in 2024, down from 63% during their peak, according to Optimal Blue data. Early in the pandemic, conforming loans dominated as more homes in high-cost areas approached the conforming loan limit. Today’s reduced conforming share is still higher than the pre-pandemic levels.
Non-conforming loans, which don’t meet the criteria for conventional loans, are gaining popularity again. These loans are often used by buyers who face affordability challenges, such as home prices that exceed conforming loan limits or issues with credit scores and down payments. The non-conforming loan share grew to 4.5% in 2024, though it remains below the 6% share seen in 2022. Read more
