Former FHA chief proposes Trump Mortgage to lower rates for first-time buyers

A former Federal Housing Administration commissioner in the Trump administration is calling for a federal program that would lower mortgage rates for first-time homebuyers, arguing that the path to owning a home is narrowing for younger Americans. The proposal, which the author calls the Trump Mortgage, would build on the Trump Accounts initiative that gives eligible children a $1,000 federal contribution.

The author writes that he recently enrolled his daughter, born in March of last year, in a Trump Account, which offers a $1,000 federal contribution for eligible children born between 2025 and 2028. He says the program gives children an opportunity to benefit from decades of investment growth, and he believes it should be only the first step in helping young Americans build lasting wealth.

He draws on his own experience to make the case. At age 20 he bought a house for $200,000 using an FHA-insured mortgage that required just 3.5 percent down, or $7,000, and he also received an $8,000 first-time homebuyer tax credit. He says that property has more than doubled in value. He worries, however, that the route he took is becoming harder for the next generation. Citing the National Association of Realtors, he notes that first-time buyers now account for just 21 percent of home purchases, the lowest share on record since tracking began in 1981.

The proposed program would be a national initiative to help qualified first-time buyers secure mortgage rates one to one-and-a-half percentage points below prevailing market rates. The author outlines a mechanism in which the Treasury, Fannie Mae and Freddie Mac would purchase mortgage bonds backed by qualifying first-time buyer loans, aiming to finance those mortgages at lower rates through the secondary bond market. He describes a strategy similar to one already being pursued by Treasury Secretary Scott Bessent and Federal Housing Finance Agency Director Bill Pulte.

He says the government would hold the bonds while interest rates remain elevated and sell them when rates decline. He stresses that the program would not provide free money, since Treasury, Fannie Mae and Freddie Mac already buy mortgage-backed securities, and that it would have clear limits on size, funding costs, prepayment risk and taxpayer exposure.

A second proposal would expand the use of tax-exempt mortgage financing. State housing finance agencies have issued tax-exempt mortgage revenue bonds for decades, and because investors generally accept lower yields when interest is exempt from federal income tax, eligible borrowers can benefit from lower rates. The author notes that Congress already has bipartisan legislation proposed to expand the capacity of these programs and suggests building on that model.

To illustrate the stakes, he describes a young couple buying a $350,000 home with a $330,000 30-year mortgage. At a 6.5 percent interest rate, the monthly principal and interest payment would be about $2,086. Lowering the rate to 5 percent would reduce it to roughly $1,772, a saving of more than $300 a month and about $100,000 over the life of the loan.

The author acknowledges that lower mortgage rates alone will not resolve the nation's housing shortage, and says expanding access to financing must be paired with policies that make it easier to build more homes. He says his experience leading the FHA showed him how reforms could reduce costs, improve efficiency and expand access to homeownership without abandoning responsible lending standards.

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Connor Quincy

Technology Reporter

Connor Quincy covers public affairs, politics, business, culture and daily news for Core Memo. The role focuses on verification, context, and clear explanations for readers.

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