Fha Loans Drive Mortgage Delinquency Increase In Q3 2025

The delinquency rate for mortgages on one- to-four-unit residential properties increased to a seasonally adjusted rate of 3.99% of all loans outstanding at the end of the third quarter of 2025, according to the Mortgage Bankers Association (MBA)’s National Delinquency Survey.

The delinquency rate increased by 6 basis points from Q2 2025 and by 7 bps from the same period one year ago. The percentage of loans on which foreclosure actions were started in the third quarter rose by 3 bps to 0.20%.

Marina Walsh, MBA’s vice president of industry analysis, said that the increases in delinquencies were led by worsening performance among Federal Housing Administration (FHA) loans.

“Since this time last year, the FHA seriously delinquent rate — which includes 90+ day delinquencies and loans in foreclosure — increased by almost 50 basis points. In contrast, the conventional and VA seriously delinquent rates remained relatively flat,” Walsh said in a statement.

Walsh noted several stressors for FHA homeowners, such as a softer labor market, personal debt obligations, and increases in taxes, homeowners insurance and other fees that exacerbate already stretched affordability. She also noted that home-price declines in some parts of the country may hinder a homeowner’s ability to sell or refinance.

While the Q3 2025 data was not impacted by the ending of COVID-era FHA loss-mitigation options and the recent government shutdown, these events may affect delinquency and foreclosure measurements in future quarters, Walsh said.

The seasonally adjusted mortgage delinquency rate rose across all most delinquency types in the third quarter. Thirty-day delinquencies increased 2 bps to 2.12%, 60-day delinquencies rose 4 bps to 0.76%, and 90-day delinquencies held at 1.11%.

By loan type, the delinquency rate for conventional mortgages increased 2 bps to 2.62%. FHA delinquencies rose 21 bps to 10.78%, while those for U.S. Department of Veterans Affairs (VA) loans increased 18 bps to 4.50%.

Year over year, the overall delinquency rate increased for all loans. Conventional delinquencies slipped 1 bps, FHA delinquencies rose 32 bps, and VA delinquencies decreased 8 bps.

Delinquency figures include loans that are at least 30 days past due but exclude those in foreclosure. The foreclosure inventory rate was 0.50%, up 2 bps from the prior quarter and 5 bps from a year earlier.

The non-seasonally adjusted seriously delinquent rate — measuring loans 90 days or more past due or in foreclosure — was 1.61%, up 4 bps from the second quarter and 6 bps from a year earlier. Quarter over quarter, the seriously delinquent rate fell 2 bps for conventional loans, rose 30 bps for FHA loans and slipped 1 bps for VA loans.

Arizona, Louisiana, Indiana, Iowa and Texas posted the largest quarterly increases in overall delinquencies, rising by a respective 29, 28, 28, 26 and 24 bps.