First-Time Home Buyer Market 2025 Conventional vs Government Profile Split

Based on YTD 2025 agency loan data, the market is split almost 50/50 by unit volume between Conventional (GSE) and Government (FHA/VA/USDA) programs.

While the volume is equal, the borrower profiles are very different. The Conventional FTHB is a prime borrower, with an average 753 credit score, a 37.9% DTI, and a 16% average down payment (84% LTV). This group has stronger credit and savings.

In contrast, the Gov. FTHB relies on program flexibility. This borrower has a 698 average credit score (55 points lower), a much higher 44.0% DTI, and a minimal down payment, reflected in the 97% average LTV. This highlights their dependence on low-down-payment programs.

The Government profile has a lower average note rate (6.25%) than the Conventional (6.67%). This reflects the government guarantee (e.g., FHA insurance), which insulates investors from credit risk, allowing sharper pricing.

Strategic takeaway for lenders: The FTHB market is not one segment, but two. A winning strategy requires distinct operations. Lenders must build separate funnels: one for high-credit/high-equity (GSE), focusing on speed and competitive pricing, and another for lower-credit/low-equity (Gov't), focusing on education, specialized underwriting, and program expertise.

The FTHB segment is coming from Gen Z - check out our chart on top housing markets.