What's on the Table: Trump's Housing Affordability Agenda Explained

The administration has rolled out an aggressive slate of proposals aimed at tackling housing affordability. Some are already in motion; others face significant hurdles. Here's what each one means and how likely it is to actually happen.

1. $200 Billion Mortgage Bond Purchase

What it is: Trump directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities (MBS). When these entities buy MBS, it increases demand for mortgage bonds, which lowers yields and that can translate to lower mortgage rates for borrowers.

Status: Already underway. FHFA Director Bill Pulte confirmed the purchase is being executed.

Will it work? Rates briefly dipped to 5.99% after the announcement, but critics like Moody's Mark Zandi warn it could boost demand without addressing supply, potentially pushing home prices higher. Others note $200B is modest compared to the Fed's $2 trillion MBS holdings.

Likelihood: Happening now

2. Ban on Institutional Homebuyers

What it is: An executive action to ban large institutional investors (think Wall Street firms and private equity) from purchasing single-family homes. Trump claims builders are selling homes to corporations at 20-40% discounts compared to individual buyers.

Status: Announced, but details are thin. Trump has called on Congress to codify it into law.

Will it work? Institutional investors own a relatively small share of single-family homes nationally, though their presence is significant in certain Sun Belt metros. Legal challenges are likely, and it's unclear what enforcement mechanisms would look like.

Likelihood: Uncertain. Executive action possible, but legislation faces hurdles.

3. FHA Mortgage Insurance Premium Reduction

What it is: A proposal to reduce FHA mortgage insurance premiums, which currently sit at 175 basis points upfront and 55 basis points annually. Lower premiums would reduce costs for FHA borrowers, typically first-time buyers and those with lower credit scores.

Status: Under discussion. The Mortgage Bankers Association is actively advocating for cuts.

Will it work? FHA's capital levels are strong enough to support a temporary cut. KBW analysts estimate about 20% of private mortgage insurer business (loans with FICO scores below 720) could shift to FHA if premiums drop. Previous cuts in 2015 and 2023 had only temporary market impacts.

Likelihood: Likely. A temporary cut is plausible given FHA's financial position.

4. Penalty-Free Retirement Account Withdrawals for Down Payments

What it is: A draft executive order that would allow homebuyers to withdraw from 401(k) plans and 529 education savings accounts without the usual 10% early withdrawal penalty to fund down payments.

Status: Reportedly in development; not yet signed.

Will it work? It would help with the down payment hurdle, but financial experts warn it could harm long-term retirement security. It also doesn't address the core affordability issue of home prices and monthly payments.

Likelihood: Possible. Executive authority is unclear and may require Congressional action.

5. Portable Mortgages

What it is: Allow homeowners to transfer their existing mortgage rate to a new property when they move. This would address the "lock-in effect," the phenomenon where homeowners with ultra-low pandemic-era rates refuse to sell because they'd have to take on a much higher rate.

Status: Pulte says the administration is "actively evaluating" this option.

Will it work? It could unlock inventory by freeing up sellers who are currently staying put. However, it would disrupt the mortgage-backed securities market and likely require Congressional action to sort out legal complexities.

Likelihood: Unlikely in the near term. Significant structural and legal hurdles remain.

6. 50-Year Mortgages

What it is: Extend mortgage terms from 30 years to 50 years, lowering monthly payments by spreading them over a longer period.

Status: Pulte initially championed this idea, but has since backed away, telling reporters the administration has "other priorities."

Will it work? Economists widely panned this proposal. While monthly payments would drop slightly, borrowers would pay vastly more in interest over the life of the loan and build equity extremely slowly. It could also inflate home prices by increasing buyer purchasing power.

Likelihood: Shelved. Faced bipartisan criticism.

7. Federal Land Release for Housing Development

What it is: Open up portions of the 650 million acres of federally owned land for residential development, particularly in western states where land constraints drive up housing costs.

Status: Part of the administration's broader housing platform, but no specific executive action yet.

Will it work? In theory, releasing land could boost supply in constrained markets. In practice, federal land is often in remote locations without infrastructure, and development would take years. Environmental and political opposition is also likely.

Likelihood: Possible but slow. Long timeline even if pursued.

8. Pressure on Homebuilders to Lower Prices

What it is: Pulte has publicly criticized major homebuilders for stock buybacks (D.R. Horton spent $4.3B, Lennar $1.7B) instead of using that capital to lower home prices. He's threatened to use Fannie and Freddie's pricing power as a "stick" against builders who don't cooperate.

Status: Rhetorical pressure so far; no formal policy announced.

Will it work? Builders operate on market dynamics, and buybacks are standard corporate practice. It's unclear what leverage FHFA actually has, and builders may resist government interference in capital allocation decisions.

Likelihood: Unlikely to move the needle. More bark than bite for now.

The administration is throwing a lot at the wall to see what sticks. The MBS purchase is already in motion and the FHA premium cut is plausible. But the proposals that would make the biggest structural difference, such as unlocking inventory through portable mortgages, adding supply through land release, or meaningfully restricting institutional buyers, all face significant legal, political, or practical obstacles.

The core challenge remains: we have a supply problem, not just a demand problem. Until more homes get built, any policy that boosts buyer demand risks pushing prices higher rather than making homeownership more affordable.

Have questions about how these policies might affect your clients? Reach out. I'm always happy to talk through what this means for your buyers.