With inflation and the increase in homes, interest rates, and more, the dream of becoming a homeowner may seem impossible. However, recently, the Department of Housing and Urban Development (HUD) announced that there would be a 30-point reduction to the annual mortgage insurance premiums provided to homebuyers who obtain an FHA-insured mortgage loan.
Mortgage insurance premiums will reduce from 0.85 percent to 0.55 percent for most homebuyers looking into an FHA-insured mortgage, resulting in an estimated combined savings of $678 million for American families in 2023. The 30-point reduction will benefit approximately 850,000 borrowers over the coming year, saving families an average of $800 annually.
“For this country to truly succeed, all Americans must have access to opportunity. That means expanding access to wealth-building and home ownership,” said HUD Secretary Marcia L. Fudge. “Today, we are building on the steps we’ve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future. As we reduce housing costs for people with FHA mortgages, we continue our work to address longstanding disparities in homeownership.”
Related: FHA Mortgages
Who Benefits from the Premium Change?
The reduction plan supports the Biden-Harris Administration’s goals to make homeownership more accessible for working families, particularly households of color for whom FHA-insured mortgages have been a cornerstone for access to homeownership. The Biden-Harris Administration changed FHA’s underwriting policies allowing lenders to use rental history when evaluating applicants for an FHA-insured mortgage- making it easier for first-time homebuyers to qualify.
HUD expanded the tools for access to housing counseling so that homebuyers can seek assistance from more than 1,500 HUD-approved housing counseling agencies and 4,000 HUD-certified housing counselors. HUD also changed how student debt is evaluated, allowing borrowers with student loan payments to qualify.
The 30-basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by the FHA and all eligible property types, such as condominiums, manufactured homes, and single-family homes.
HUD and the Biden-Harris Administration have taken various steps to help homeownership become a reality for more Americans. The annual MIP reduction will be effective for mortgages endorsed for insurance by FHA on or after March 20, 2023.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients to lower their monthly mortgage payments.