FHA Layoffs? Here’s What Home Buyers Want to Know

A powerhouse of the U.S. housing market seems at the brink of a major staff cut.

HUD is the Department of Housing and Urban Development. It oversees the country’s FHA-backed loans. And it’s in for some turbulence.

Firm Details? Any Moment.

By law, HUD is supposed to operate in every state to process home buyers’ mortgage insurance. Yet the new, Trump-appointed head of HUD, Scott Turner, is involved in forming a Department of Government Efficiency waste-cutting task force within the agency. Could overhauls and job cuts be far behind?

Here’s who’s talking about it:

• Bloomberg has reported that the Trump administration plans to cut no less than 40% of the workers at the Federal Housing Administration (FHA), which operates under HUD.

• Antonio Gaines, head of the union that represents HUD employees, told Bloomberg Law the Trump administration plans to cut 50% of HUD personnel. According to CNBC.com, Gaines said the FHA won’t face cuts “near the 40% to 50% range that other program areas are experiencing, but there will be some cuts.”

• Similarly, the Center on Budget and Policy Priorities anticipates about half the HUD staff potentially gone from jobs related to affordable housing. Even bigger cuts could befall offices that help homeowners with disaster recovery, and offices carrying out fair housing laws. ​

This is partially disputed. CNN quoted a federal spokesperson saying only that the 50% claim isn’t accurate. HUD employees themselves reportedly aren’t sure what is going on. That could change any moment.

What Cuts Have Already Happened?

Here are a few things we do know:

• Staff members in probationary status have already been dismissed from their posts at the Department of Housing and Urban Development.

• In February, the federal government shut down “78 grants in 33 states totaling more than $30 million that provided congressionally-approved funding for fair housing organizations,” as the National Fair Housing Alliance informed Time magazine.

• We also know the government is winding down the section of the Inflation Reduction Act that offers grants and financing for efficient, climate-resilient improvements for affordable housing.  This undermines the resilience of working people as they cope with fires, flooding, and storm-related damage.

• The current administration has put the brakes on $60 million for affordable housing initiatives across the entire country.

• Small, local nonprofits devoted to affordable housing for low-income households, and larger groups like Habitat for Humanity, are losing funding.

In short, job cuts in the housing sector are real and they’re extensive. Government employees continue to face mass job losses as the administration focuses on cutting federal spending. Seniors, people with disabilities, and people without generational wealth will be left out of initiatives on account of the funding freeze.

Now, the FHA is one part of HUD. It’s the part that many buyers are concerned about, because it backs loans people need, as we’ll explain in the next section. Whether the FHA itself will be cut, and how much, remains to be seen.

The FHA Makes Deeds Accessible for Many  

Let’s take a quick look at the immense value of the FHA to U.S. home seekers. Before Congress created the FHA, very few households could afford to buy homes. Since the 1930s, things have changed for the better. FHA backing lets hopeful buyers — millions of them — get mortgages. Why? Because banks have stronger incentives to make loans to people when the risks of doing so are covered by the government.

Buyers can put as little as 3.5% down (plus the cost of mortgage insurance) and buy a home with an FHA-backed loan. That’s extremely useful, especially when first-time buyers face serious affordability challenges in the U.S. housing market.

The FHA makes many loans possible for:

• Self-employed home buyers.

• Seniors and disabled home buyers.

• People buying fixer-uppers, who want to roll the cost of renovations into the mortgage loan.

Buying a home continues to be one of the strongest possible ways to build intergenerational wealth.  The FHA exists to help connect buyers with deeds and to make home equity something any household can enjoy. 

FHA loans can cover what most any buyer needs, with a low down payment requirement. Loan applicants may check the FHA mortgage limits updated for the current year.

FHA Job Cuts Would Impact Mortgage Applicants

At the time of this writing we haven’t seen FHA staff cuts — only HUD staff cuts. For now, the normal procedures apply.

In any case, cuts shouldn’t change a home buyer’s ability to get an FHA loan.

But if cuts do occur:

• The FHA-backed loan approval process would take more time. There’d be fewer staffers reviewing applications, issuing decisions, and tapping funding sources.

• It could take longer to get a rate, longer for underwriting to finish, and longer to close.

• A buyer who’s relying on an FHA loan could lose clout with sellers, particularly in fast-moving markets where sellers don’t expect to wait.

• Local grants and down payment assistance could suffer. They are already suffering, to the extent that community agencies rely on HUD.

Expect a significant impact on the real estate industry, and on future borrowers. Around 10 to 15% of today’s home buyers have FHA-backed mortgages.

To make matters worse, the tariffs have gone into effect. The tariff structure raises the cost of acquiring a deed. The math is clear. Anything that makes building materials cost more, winds up creating higher price tags for home buyers.

We’ll Keep You Posted

Affording a mortgage loan is a major barrier for many hopeful home buyers. Given the high cost of housing, this challenge just won’t ease up.

At least we’ve had the Federal Housing Administration helping some people qualify as borrowers. And so far, the FHA is holding up. That said, new buyers looking for mortgages may soon need more patience and energy than ever.

Our focus, of course, is the availability of deeds for the people of our nation. Slashing staff and programs at the HUD is not aligned with this goal. For now, we wait and we watch, with a great deal of concern.

Please note: This and other articles on Deeds.com are offered as general commentary and issue-spotting. Nothing on this or any other website substitutes for personalized advice from a legal or financial professional.