The Trump administration is set to lay off nearly half of the workforce at the Federal Housing Administration (FHA),
FHA is the federal agency that insures home loans for borrowers who might not otherwise qualify for traditional mortgages, according to sources familiar with the plan.
The U.S. Department of Housing and Urban Development (HUD), which oversees the FHA, has reportedly planned to discharge 50% of its workforce, with FHA employees among those affected. The move is part of a broader effort by President Donald Trump to cut government jobs deemed non-essential.
Impact on Homebuyers and Lenders
The FHA has played a crucial role in helping first-time homebuyers and low-income Americans secure home loans by insuring mortgages against default.
Since its founding in 1934, the agency has backed more than 40 million home loans, making it one of the world’s largest mortgage insurers.
Industry experts warn that a significant reduction in FHA staff could disrupt mortgage approvals and limit access to credit for borrowers with lower credit scores or smaller down payments.
“None of the functions that support FHA would work,” said Ethan Handelman, former HUD deputy assistant secretary for multifamily housing programs, adding staffing cuts could severely paralyze the agency’s operations.
FHA’s Financial Strength and Workforce Reductions
Despite these cuts, the FHA remains financially strong. The Mutual Mortgage Insurance Fund (MMI Fund), which funds FHA-backed loans without requiring congressional appropriations, grew from $145 billion to $173 billion last year, boasting a capital ratio of 11.47%. One FHA staffer described the agency as “the goose that laid the golden egg”, underscoring its profitability.
The American Federation of Government Employees (AFGE) National Council 222, which represents over 5,000 HUD employees, confirmed that the layoffs would impact FHA workers. HUD employs approximately 9,600 people, though it is unclear how many directly support FHA programs.
Meanwhile, Elon Musk-led Department of Government Efficiency has posted on X, the social media platform Musk owns, that “$1.9 billion of HUD money was just recovered after being misplaced during the Biden administration due to a broken process.”
HUD’s Response and Broader Federal Job Cuts
HUD officials have pushed back against reports of the planned layoffs. Kasey Lovett, spokeswoman for HUD Secretary Scott Turner, dismissed claims of workforce reductions as “not accurate” but declined to provide further details.
The FHA is HUD’s largest agency, with about 75% of HUD personnel working on housing programs. Even if FHA-specific positions are spared, deep cuts in other HUD divisions could indirectly impact the agency.
For example, the Office of Policy Development and Research, which conducts market studies that guide FHA lending decisions, is expected to lose a significant number of employees.
The FHA staff reductions come amid a wider push by the administration to downsize federal agencies, including recent layoffs at the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits. President Trump has directed agency heads to eliminate roles not “mandated by statute,” specifically targeting diversity, equity, and inclusion (DEI) programs.
With HUD and FHA facing substantial staffing cuts, housing advocates fear the changes could slow mortgage processing times, reduce loan availability, and limit support for underserved communities in need of federally backed home loans.
