DOES FHA INCREASE HOME OWNERSHIP OR JUST ACCELERATE IT

Qualification standards in the main home mortgage insurance program ad ministered by the Federal Housing Administration (FHA) are less string ent than the standards set by conventional lenders. However, household s that qualify only for FHA financing of a modestly priced home in a g iven year are a narrow financial stratum of the population. The paper uses data from two longitudinal surveys to document that membership in that stratum changes frequently. Most of the ''FHA only'' qualifiers graduate to conventional qualification within a few years. The study a lso shows that most renters wait years to purchase once they have firs t qualified. The paper concludes that, to the extent that FHA has any influence on home ownership, it is mostly to accelerate home purchase, not to enable it among households that otherwise would never be able to buy. (C) 1997 Academic Press.