Credit History and the FHA-Conventional ChoiceReal Estate Economics
Format of Original30 p.
AbstractModels 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.
Citation InformationAnthony Pennington-Cross and Joseph Nichols. "Credit History and the FHA-Conventional Choice" Real Estate Economics (2000) ISSN: 1080-8620
Available at: http://works.bepress.com/anthony_pennington_cross/22/