Title

Credit History and the FHA-Conventional Choice

Document Type

Article

Language

eng

Format of Original

30 p.

Publication Date

6-2000

Publisher

Blackwell Publishing

Source Publication

Real Estate Economics

Source ISSN

1080-8620

Abstract

Models explaining whether households choose conventional or FHA mortgage financing typically use differential insurance premiums, loan-to-value (LTV) and payment-to-income underwriting standards, and local economic conditions to explain household behavior. Using a large and geographically diverse sample, we expand the standard choice model by including measures of borrower credit history. We find that the ability of a homebuyer to avoid credit problems is an important part of the FHA–conventional choice. In addition, credit scores of FHA borrowers are worse on average than those of conventional borrowers, but as LTV increases credit scores of conventional borrowers deteriorate.

Comments

Real Estate Economics, Vol. 28, No. 2 (June 2000): 307–336. DOI.

Anthony Pennington-Cross was affiliated with the University of Pennsylvania at the time of publication.