Jane Dotson
Former US President Donald Trump's administration made several changes to the mortgage system, including reversing a cut to FHA mortgage insurance premiums, and calling on housing giants Fannie Mae and Freddie Mac to consider cryptocurrency as an asset for mortgage applications. Trump has also expressed intentions to privatize Fannie Mae and Freddie Mac, which could have significant consequences on mortgage rates and the affordability of housing for Americans. These changes have sparked debate among lawmakers, industry experts, and economists, with some warning of potential risks and costs to consumers.
| Characteristics | Values |
|---|---|
| FHA Mortgage Insurance Order | Trump's order prevents a cut to the mortgage insurance premium for FHA loans from 0.85% to 0.60% |
| Impact | The order increases costs for homebuyers and could "chill the market for a portion of buyers" |
| FHA Loans | Offered to consumers who ordinarily wouldn't qualify for a conventional loan; allow cash-strapped consumers to put just 3.5% down and get a home |
| Trump's Plan for Fannie Mae and Freddie Mac | To privatize the companies, reducing federal government involvement and shifting risk to financial investors |
| Impact of Privatization | Likely increase in mortgage rates, making housing less affordable for Americans |
| Crypto Assets and Mortgages | The FHFA has called on Fannie Mae and Freddie Mac to consider cryptocurrency as an asset on mortgage applications |
| Tariffs | Trump's plan to raise federal revenue using tariffs will likely increase home repair and replacement costs, which could lead to higher home insurance premiums |
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What You'll Learn
Trump reverses FHA mortgage insurance cut
On 20 January 2017, one of US President Donald Trump's first actions in office was to reverse a planned cut in the cost of government-backed Federal Housing Administration (FHA) mortgages. The cut, which had been initiated by the Obama administration, would have lowered the annual FHA insurance premium on new mortgages for lower- and middle-income and first-time home buyers from 0.85% to 0.6%. This would have resulted in savings of $500 annually on a $200,000 mortgage.
FHA mortgages are intended to encourage first-time and medium-income borrowers to enter the housing market, particularly those with lower credit scores or smaller down payments. Cash-strapped consumers can put just 3.5% down and still get an FHA mortgage. These loans are guaranteed by the FHA for consumers who ordinarily wouldn't qualify for a conventional loan. In exchange, the FHA requires homebuyers to maintain insurance on what they borrow.
Trump's order prevented the cut from taking effect, with Republican lawmakers arguing that the agency needed funds to guard against a repeat of the 2013 federal bailout caused by rising defaults on FHA mortgages. Lobbying groups, such as the National Association of Realtors (NAR), criticised the move, saying it could negatively impact buyers and chill the market.
Despite the controversy, it is important to note that the fundamental economics of FHA mortgages have not changed due to Trump's order, and demand for FHA products has remained strong even during the volatile pandemic housing market.
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Trump's plan to privatise Fannie Mae and Freddie Mac
During his first term, Donald Trump tried to privatize Fannie Mae and Freddie Mac, but was unsuccessful. In May 2025, Trump said he was giving "very serious consideration" to taking the two companies public.
Fannie Mae and Freddie Mac are the backbone of the U.S. housing market, supporting about 70% of U.S. mortgages. They purchase loans from lenders, package them into securities, and sell them to investors, ensuring a steady flow of capital to mortgage markets and supporting affordable loan rates. They were created by the U.S. Congress to expand the national home lending market.
Some critics warn that privatizing these companies would disrupt the system and make buying a home more expensive. Investors might view mortgage-backed securities as riskier without explicit government guarantees, leading to higher borrowing costs. Privatization would also remove an implicit government guarantee that previously bailed out the companies after the collapse of the housing market in 2008.
However, supporters of privatization, including billionaire investor Bill Ackman, argue that it could transform the companies and potentially benefit stakeholders. They also point out that the companies are now financially healthy and that ending federal control would be a good deal for taxpayers.
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Crypto assets considered for mortgage applications
The Trump administration has made a significant move by ordering that cryptocurrency be considered a federal mortgage asset. This means that borrowers will be able to use their crypto assets for mortgage applications without converting them into cash. This is a major shift in policy, as previously, only liquidated crypto assets held in compliance with financial regulations could be considered for the mortgage application process.
The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to consider cryptocurrency as an asset in single-family mortgage loan risk assessments. This decision acknowledges the growing role of cryptocurrency in household financial portfolios and the increasing institutional embrace of crypto across banking, payments, and federal policy. However, it is important to note that this policy change only applies to digital assets held on U.S.-regulated, centralized exchanges.
While this move opens new doors for individuals with crypto holdings to enter the real estate market, it is not without its challenges. Crypto assets are highly volatile, and lenders require extensive documentation to verify the origin and conversion of crypto funds. Additionally, there is ongoing debate around the long-term viability of crypto as an investment and currency. Some investors prohibit the use of crypto for mortgage transactions due to the complex "paper-trailing requirements" and prefer accounts with recorded transactions where funds are "backed out."
Furthermore, this development comes amidst Trump's plans to remake mortgage finance, which have raised questions and caused confusion within the industry. Trump has expressed intentions to privatize Fannie Mae and Freddie Mac, the government-controlled companies that guarantee over half of America's mortgages, while also exploring ways to maintain government control. This has sparked discussions about the potential impact on the housing market and mortgage rates.
Overall, while the consideration of crypto assets for mortgage applications offers new opportunities, it also presents complexities and uncertainties that borrowers and the industry are navigating.
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Trump's plan to remake mortgage finance
In 2025, Trump's plan to remake mortgage finance raised questions among GOP lawmakers and the mortgage industry. Despite expectations that his administration would reduce government control over the nation's housing finance system, Trump pledged to maintain an implicit federal guarantee for the solvency of government-controlled companies, Fannie Mae and Freddie Mac. These companies, which guarantee more than half of America's mortgages, have been under government conservatorship since 2008.
Trump's top housing regulator, Bill Pulte, added to the confusion by suggesting that the administration is exploring ways to sell shares while keeping the companies under government authority. This has led to concerns about a potential rift with Republicans and administration aides who favour privatisation.
Trump's plan involves considering cryptocurrency as a federal mortgage asset. The Federal Housing Finance Agency (FHFA), led by director William J. Pulte, has directed Fannie Mae and Freddie Mac to include cryptocurrency as an asset in single-family mortgage loan risk assessments. This aligns with Trump's vision to make the United States the "crypto capital of the world". However, it is unclear how the plan to allow homeowners to obtain mortgages with crypto assets would work.
In addition, Trump reversed an FHA mortgage insurance cut, preventing a reduction in the mortgage insurance premium from 0.85% to 0.60%. This decision was criticised by lobbying groups such as the National Association of Realtors (NAR), who argued that it could negatively impact a portion of buyers.
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Impact on mortgage rates
Trump's plan to privatize mortgage giants Fannie Mae and Freddie Mac, which have been under government control since the 2008 financial crisis, has raised concerns about its potential impact on mortgage rates. Supporters of privatization argue that it will help keep mortgage rates down and promote competition in the housing finance market. However, others disagree, stating that privatization will lead to higher mortgage rates, making housing even less affordable for Americans.
Fannie Mae and Freddie Mac don't directly provide loans to homebuyers. Instead, they purchase loans from mortgage companies, bundle them into securities, and sell them on the secondary market. This process helps to keep mortgage rates low and provides liquidity to the lenders, enabling them to make more loans.
If Fannie Mae and Freddie Mac are privatized, there is a risk that mortgage rates will increase. Without government support, these companies may need to raise fees to compensate for the increased risk they would face. This could result in higher costs for borrowers, particularly those with riskier loans.
According to Parrott and Zandi's analysis, privatization would cause rates for 30-year mortgages to rise by 0.43% to 0.97%. Applying this increase to the average homeowner's mortgage balance would result in additional costs of $730 to $1,670 per year. However, Calabria, a former head of the FHFA during the Trump administration, disagrees with these concerns, stating that there should not be any worries about mortgages becoming more expensive.
In addition to the potential impact on mortgage rates, Trump has also made another significant change to mortgages by directing the Federal Housing Finance Agency (FHFA) to consider cryptocurrency as an asset on mortgage applications. This move could be influential, as Fannie Mae and Freddie Mac together guarantee more than half of all America's mortgages.
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Frequently asked questions
Trump's order relates to the cost of mortgage insurance and prevents a cut to insurance premiums from taking effect. This means that your mortgage insurance costs will not decrease.
Obama administration officials had set the new mortgage insurance premium for FHA loans at 0.60%, representing a decrease from 0.85%. This would have resulted in annual savings of $500 on a $200,000 mortgage.
Republican lawmakers argued that the agency responsible for FHA mortgages needs funds to guard against a repeat of the 2013 bailout, which was caused by rising defaults on these loans. Insurance premiums provide a significant portion of the agency's reserves.
Lobbying groups, such as the National Association of Realtors (NAR), argue that Trump's order could negatively impact the market for a portion of buyers. However, it's important to note that the fundamental economics of FHA mortgages remain unchanged.
Yes, Trump has proposed considering cryptocurrency as an asset on mortgage applications. This would allow homeowners to use their crypto assets when applying for a mortgage, potentially increasing the options for homebuyers. However, it's unclear if this proposal will be approved and implemented.
