- Easier access to mortgages starting in the 1930s spurred the US baby boom, researchers found.
- Two federal programs increased homeownership for eligible Americans, boosting marriage and birth rates.
- Low homeownership rates today may partially explain declining birth rates around the world.
If you want Americans to have more babies, it helps if it’s cheap and easy to buy a house.
The advent of mortgages with low down payments in the 1930s facilitated a sharp uptick in the US birth rate that created the baby boom, per a National Bureau of Economic Research February 2025 working paper. The findings might help explain why countries across the globe, including the US, are struggling with tumbling birth rates as housing prices soar and homeownership for younger people stagnates.
The researchers — economists Lisa Dettling at the Federal Reserve Board of Governors and Melissa Schettini Kearney at the University of Maryland — found that two mortgage insurance programs led to 3 million additional births between 1935 and 1957, accounting for about 10% of the spike in births associated with the baby boom. The researchers found that these new mortgages lowered the age when people got married and had their first child and increased the total number of kids they had.
In 1934, the Federal Housing Administration introduced a loan insurance program that offered potential homebuyers 30-year fixed-rate mortgages with much lower down payments than had previously been required. A decade later, the Veteran’s Administration began insuring home loans for returning servicemembers with no down payment required.
The FHA and VA-backed loans were a huge hit. The programs helped boost the rate of homeownership among white people of childbearing age from 20% to 50% between 1940 and 1960. And half of this homeownership spike happened before the end of World War II — even as many Americans were still feeling the effects of the Great Depression and few new homes were being constructed.
The researchers analyzed newly hand-digitized data on FHA and VA loans, birth count data from the National Center for Health Statistics, population data from the Census, and personal income data from the Bureau of Economic Analysis to come to their findings.
The analysis finds that these mortgages did not have a discernible effect on births among non-white women because these women were less likely to have access to or benefit from FHA and VA mortgages. Historically, Black Americans were “redlined” out of these mortgages while the bulk of the FHA and VA loans went to white families — the government wouldn’t insure homes in areas that they deemed too risky or undesirable, which were often predominantly Black or minority neighborhoods.
How cheaper mortgages led to a baby boom
Finances are key when it comes to the decision to have a kid. When unemployment rises or incomes fall, people have fewer babies. Millennials have been particularly hard-hit by sky-rocketing healthcare and housing costs, and the debt crisis. Their generation controls less than 5% of the nation’s wealth, while baby boomers held 21% of the country’s wealth at the same age range.
This has all led to a gap between the number of children people say they want and the number they actually have. Some European countries have tried to lift birth rates to subsidize childcare and paid family leave, but have seen mixed results.
“If expenses — especially housing costs — were more reasonable, I’d feel much more financially secure and rich,” Madelyn Driver, a millennial earning six figures who was still struggling to afford a home, previously told BI.
Dettling and Kearney’s research found that it’s actually more about easier access to homeownership rather than lower housing costs.
The type of mortgage that took off in the 1940s didn’t bring overall housing costs down; it just reduced the barrier to becoming a homeowner by allowing very low down payments and long-term loans. This meant people could purchase homes at younger ages, often before they made the decision to have kids.
Making it easier for younger people to buy homes now could help boost plummeting birth rates — although, as 2008’s housing crisis showed, it’s still important to ensure that borrowers are fit to be eligible for mortgages.
One of the key lessons of the mortgage baby boom findings, per Kearney, is that policy that opens the door to accessible credit or lower down payments can make a real impact. “It’s not just about, ‘Oh, we need housing to be less expensive,'” she said.
Homeownership rates for younger Americans fell after the mid-aughts housing bubble popped and, while they’ve ticked up over the last decade, still remain relatively low. For Americans under 35 years of age, there’s been an even more recent decline in homeownership since late 2020.
“Maybe how easy it is to have kids is less about can they take three months off work versus ‘do I have a bedroom to put this kid in for the next 18 years?'” Kearney said.
Do you have a story to share about homeownership and having children? Contact these reporters at erelman@businessinsider.com and jkaplan@businessinsider.com.
