For months, the mortgage industry has been in a holding pattern, repeating a single mantra: "We just need lower rates and more housing supply to solve affordability."
While we've all been watching the Fed and construction reports, a profound, structural shift has occurred - one that lower rates and new builds alone won't fix. The industry is waiting for a "return to normal," but our data shows "normal" is gone. Lenders who are pinning their 2025 and 2026 growth plans on these macro factors are positioned to fail.
Why? Because the largest, most critical segment of the entire purchase market, the First-Time Home Buyer (FTHB), has fundamentally split in two.
"Affordability" is no longer a single problem; it's two different problems, demanding two different solutions that lenders can act on today.
Before we can dissect the affordability problem, we must be clear on who we're solving for. It's not the repeat buyer. It's the FTHB.
Data from 2025 YTD (through Sept.) on 30-year fixed-rate agency originations shows a staggering reality: First-Time Home Buyers now account for 60% of all purchase loans.
The strategic takeaway here is that this is not a "niche" segment but the dominant majority. Any lender whose entire purchase strategy - from product development to underwriting and marketing - isn't FTHB-centric is competing for a minority of the business.
-> See the full FTHB vs. Repeat Buyer market share chart here.
Here is where the true strategic challenge begins. This 60% majority is not one group. When we looked at how these buyers are financing their homes, the data revealed a market in perfect equilibrium.
The FTHB market is split almost exactly 50/50 between Conventional and Government loans.
This 50/50 split is a landmine for product strategy. A lender facilitating only, or mostly, conventional loans is ignoring the other half of the FTHB market.
This is not one market. It is two distinct, equal-sized markets. And as the data shows, they are comprised of two completely different borrowers.
-> See the full Conventional vs. Government FTHB volume chart here.
This insight disproves the "lower rates" myth. Lower rates will help both of these groups, but it doesn't solve their unique structural challenges.
A detailed look at these two 50/50 segments reveals two vastly different FTHB profiles.
This borrower represents half of the FTHB market. They are, in a word, prime with avg. Credit Score: of 753, LTV of 84% (a 16% down payment), and avg. DTI of 37.9%.
Their Affordability Problem. This borrower's challenge isn't qualification; it's competition. They are fighting for limited inventory and need to win bidding wars. Their "affordability" problem is solved with speed-to-close, competitive pricing, and a seamless digital process.
This borrower represents the other half of the market. They are, in a word, resilient. Here is a summary of their credit profile:
Their Affordability Problem. This borrower's challenge is structural. They don't have a 16% down payment. Their credit profile is more complex. Their "affordability" problem is solved with access to low-down-payment programs (FHA, VA, USDA), down payment assistance (DPA), and high-touch, expert education.
-> See the full data table comparing the two FTHB profiles here.
The 2025 FTHB market is not a single entity waiting for lower rates or more supply. It is a 60% market majority that has fractured into two equal halves right now.
Waiting for macro forces to fix your pipeline is a strategy of hope. A strategy of data shows that you must build a dual-track operation to win. You need to have:
Lenders who fail to see this split will be masters of 50% of the market... and completely invisible to the other 50%.
Stop guessing and start strategizing. The insights in this article were sourced directly from Polygon Pulse, our MBS pivot tool.
Use it to track your own market share, benchmark your FTHB strategy against competitors, and identify your next opportunity - down to the loan level.
Stop waiting for lower rates. New 2025 YTD data reveals the First-Time Home Buyer market (60% of all purchases) has split in two. Lenders need a dual-product strategy to win.
For months, the mortgage industry has been in a holding pattern, repeating a single mantra: "We just need lower rates and more housing supply to solve affordability."
While we've all been watching the Fed and construction reports, a profound, structural shift has occurred - one that lower rates and new builds alone won't fix. The industry is waiting for a "return to normal," but our data shows "normal" is gone. Lenders who are pinning their 2025 and 2026 growth plans on these macro factors are positioned to fail.
Why? Because the largest, most critical segment of the entire purchase market, the First-Time Home Buyer (FTHB), has fundamentally split in two.
"Affordability" is no longer a single problem; it's two different problems, demanding two different solutions that lenders can act on today.
Before we can dissect the affordability problem, we must be clear on who we're solving for. It's not the repeat buyer. It's the FTHB.
Data from 2025 YTD (through Sept.) on 30-year fixed-rate agency originations shows a staggering reality: First-Time Home Buyers now account for 60% of all purchase loans.
The strategic takeaway here is that this is not a "niche" segment but the dominant majority. Any lender whose entire purchase strategy - from product development to underwriting and marketing - isn't FTHB-centric is competing for a minority of the business.
-> See the full FTHB vs. Repeat Buyer market share chart here.
Here is where the true strategic challenge begins. This 60% majority is not one group. When we looked at how these buyers are financing their homes, the data revealed a market in perfect equilibrium.
The FTHB market is split almost exactly 50/50 between Conventional and Government loans.
This 50/50 split is a landmine for product strategy. A lender facilitating only, or mostly, conventional loans is ignoring the other half of the FTHB market.
This is not one market. It is two distinct, equal-sized markets. And as the data shows, they are comprised of two completely different borrowers.
-> See the full Conventional vs. Government FTHB volume chart here.
This insight disproves the "lower rates" myth. Lower rates will help both of these groups, but it doesn't solve their unique structural challenges.
A detailed look at these two 50/50 segments reveals two vastly different FTHB profiles.
This borrower represents half of the FTHB market. They are, in a word, prime with avg. Credit Score: of 753, LTV of 84% (a 16% down payment), and avg. DTI of 37.9%.
Their Affordability Problem. This borrower's challenge isn't qualification; it's competition. They are fighting for limited inventory and need to win bidding wars. Their "affordability" problem is solved with speed-to-close, competitive pricing, and a seamless digital process.
This borrower represents the other half of the market. They are, in a word, resilient. Here is a summary of their credit profile:
Their Affordability Problem. This borrower's challenge is structural. They don't have a 16% down payment. Their credit profile is more complex. Their "affordability" problem is solved with access to low-down-payment programs (FHA, VA, USDA), down payment assistance (DPA), and high-touch, expert education.
-> See the full data table comparing the two FTHB profiles here.
The 2025 FTHB market is not a single entity waiting for lower rates or more supply. It is a 60% market majority that has fractured into two equal halves right now.
Waiting for macro forces to fix your pipeline is a strategy of hope. A strategy of data shows that you must build a dual-track operation to win. You need to have:
Lenders who fail to see this split will be masters of 50% of the market... and completely invisible to the other 50%.
Stop guessing and start strategizing. The insights in this article were sourced directly from Polygon Pulse, our MBS pivot tool.
Use it to track your own market share, benchmark your FTHB strategy against competitors, and identify your next opportunity - down to the loan level.