How Well Are Fannie, Freddie, and Ginnie Serving First-Time Home Buyers?

With the foundational mission of Fannie Mae, Freddie Mac, and Ginnie Mae centered around expanding access to homeownership, especially for first-time buyers, it's worth asking: how well are they doing? A surface-level glance suggests they’re performing reasonably well. In Ginnie Mae’s market, about two-thirds of purchase mortgages go to first-time home buyers. On the conventional (Fannie and Freddie) side, the figure is lower but still significant, averaging 44 percent since 2017. With refinancing incentives largely absent in today’s rate environment, most new mortgage activity is purchase-driven: 81 percent in 2023 and 2024 versus just 46 percent in the preceding three years. This means a larger share of overall originations are reaching those taking their first step into homeownership.

When we dig into borrower characteristics, clear differences emerge. Ginnie Mae loans serve a less affluent borrower base, reflected in lower credit scores: first-time buyers average around 700, compared to 724 for repeat buyers. On the conventional side, scores are much higher and more tightly clustered: 755 for first-timers versus 764 for repeat buyers. Debt-to-income (DTI) ratios, however, show relatively little difference: 45–46 in Ginnie loans and about 39 for conventional borrowers across both groups. Despite these similar DTIs, first-time buyers exhibit consistently weaker performance when it comes to mortgage health. They're more prone to serious delinquencies (defined as 90+ days for Ginnie loans and 120+ days for conventional ones), particularly after their loans age beyond the first year. This is likely a result of having less financial cushion and less experience managing mortgage debt.

In the conventional loan space, delinquency rates after 12 months average 0.6 percent for first-time buyers, compared to 0.4 percent for others. But the real gap shows up in Ginnie Mae loans, where first-timers average a 4.0 percent serious delinquency rate after a year, versus just 2.5 percent for repeat buyers. For mortgage-backed securities (MBS) investors, this matters. Pools with a high concentration of repeat buyers generally present less risk. (Who would you rather have? A seasoned All-Star or a rookie...) Performance history matters, especially when buying at a premium. For the same reason, investors may want to avoid premium-priced pools dominated by first-time buyers, particularly in the Ginnie Mae space where credit performance diverges more sharply over time.

Another key distinction lies in early curtailments, the partial paydowns of mortgage principal ahead of schedule. This is most evident among conventional borrowers. In the first year of a mortgage, repeat buyers curtail at an average 2.6 percent one-month conditional curtailment rate (CCR), compared to just 0.7 percent for first-time buyers. This gap narrows significantly after the first year, but the initial difference speaks volumes. Repeat buyers often use proceeds from selling a prior home to reduce the balance on a new loan, an advantage that first-timers don’t have. In Ginnie Mae loans, curtailment activity is generally muted and more aligned: 0.2 percent for first-time buyers and 0.6 percent for repeat buyers in year one.

Ultimately, Ginnie Mae, Fannie Mae, and Freddie Mac are playing meaningful roles in advancing first-time homeownership. But the performance data underscores the need for nuance in how we assess credit risk, design policy support, and allocate investment in mortgage-backed securities. First-time buyers bring different risk profiles and behavioral patterns, particularly early on in the life of a loan. Understanding those differences can lead to smarter underwriting, better pricing, and more effective investor strategies, all while continuing to serve the broader mission of expanding access to the American Dream.