Low-to-Moderate Income Consumers Present $300 Billion Growth Opportunity for the Mortgage Industry - FinLocker
Chicago, Oct. 19, 2021 – Low-to-moderate income (LMI) consumers have traditionally been overlooked in the mortgage market and trail non-LMI consumers in terms of homeownership. A new study from TransUnion (NYSE: TRU) suggests closing this gap could yield mortgage lenders as much as ~$300 billion in refinance and purchase originations.
As such, this segment of the population can offer mortgage lenders a significant growth opportunity. Many LMI consumers may qualify for loans through the Federal Housing Authority (e.g., 3.5% down payment) or through Government Sponsored Enterprises (GSEs) such as Fannie Mae or Freddie Mac. Originating more of these types of loans can not only help close the wealth and homeownership gap, banks and credit unions can also earn Community Reinvestment Act (CRA) lending and service credits and become another source of revenue for mortgage lenders.
Greater than 680 50 million * GSE credit eligible (LLPA waiver)
620-679 25 million * GSE credit eligible
* USDA (auto-eligibility at 640 & above)
580-619 16 million * 3.5% down payment FHA credit eligible
* USDA eligible
500-579 23 million * 10% down payment FHA credit eligible
Less than 500 7 million * Nurture into 10% down payment FHA credit eligible