FHA Delinquencies Rise—But Home Equity Still Holds Strong

Neil Caron
Jul 28
2 min read

July 28, 2025 | Market Watch | Presented by ReadySetLoan™

Rising mortgage delinquencies might sound alarming at first glance—but the reality is more nuanced. According to the latest data from the Urban Institute, FHA mortgage delinquencies are ticking up, even as home prices and borrower credit scores remain surprisingly strong.

So, what’s really going on in the housing market—and what does it mean for Connecticut buyers and homeowners?

🐷 RSL Piggy Points: What You Need to Know

FHA delinquencies are rising, especially among first-time and lower-income buyers.
GSE (Fannie Mae and Freddie Mac) credit scores are holding steady, and home values remain high.
Home equity levels are still robust, helping prevent a wave of distressed sales or foreclosures.
The Northeast continues to show signs of buyer strength, despite affordability challenges.

Why Are FHA Delinquencies Going Up?

FHA loans—which tend to serve first-time homebuyers and those with smaller down payments—have seen an uptick in delinquencies. Many of these borrowers are feeling the pinch from inflation, job instability, and rising living costs.

But don’t confuse this trend with the 2008 housing crisis.

“Today’s FHA borrower is not underwater,” says Neil Caron, Area Sales Manager at CMG Mortgage. “They’re just navigating tighter budgets. With home values so high, most still have significant equity to fall back on.”

The Equity Safety Net

Even with delinquencies rising, the strong equity position of American homeowners is acting as a cushion. That’s especially true here in New England, where rising property values have boosted household wealth.

This means most struggling borrowers aren’t at immediate risk of foreclosure—they can sell or refinance long before hitting a crisis point.

At ReadySetLoan™, we’re seeing a wave of clients using equity for debt consolidation, home improvements, or strategic refinancing—all moves that build long-term financial health.

What Should Buyers and Sellers in Connecticut Do Now?

📌 Buyers: Don’t let fear hold you back. FHA loans still offer accessible financing—even in a tightening credit environment. We help you understand the real numbers and what’s sustainable for your budget.

📌 Sellers: If you’re equity-rich but cash-flow tight, it might be time to explore a renovation refinance or home equity line to ease monthly stress without giving up your home.

📌 Everyone: Stay informed, not alarmed. The headlines may grab attention, but the full picture is brighter than it seems.

🎤 Neil’s Take

“We’re watching the data closely, but our clients in Connecticut remain in a strong position. The key is working with a resource that can help you interpret the market—not panic about it.”— Neil Caron, Area Sales Manager, CMG Mortgage

The ReadySetLoan™ Perspective

Housing headlines can be confusing. At ReadySetLoan™, we cut through the noise to bring you clear, empowering insights. Whether you’re buying your first home, considering a refinance, or just watching the market, we’re your trusted guide every step of the way.

Have questions? Let’s talk before the next headline hits.