FHA Mortgages are Getting More Affordable as Monthly Insurance Premiums reduce!

Earlier today, the Department of Housing and Urban Development (HUD) recently announced a significant change in the annual mortgage insurance premium for Federal Housing Administration (FHA) loans. The announcement was made by Vice President Harris and HUD Secretary Fudge during their visit to Bowie, Maryland.

Under the new policy, the annual mortgage insurance premium for most new FHA borrowers will be reduced by 0.30 percentage points, from 0.85% to 0.55% for those putting down 3.5%. This reduction is expected to help make homeownership more affordable for first-time and low-income homebuyers, who often rely on FHA loans to purchase a home. This will go into effect for all FHA case numbers pulled after 3/20/2023!

The mortgage insurance premium is a monthly fee that homeowners with FHA-insured mortgages pay to insure their mortgages. This fee is paid on top of their monthly principal and interest payments. The purpose of this fee is to protect lenders in case the borrower defaults on their loan.

The reduction in the mortgage insurance premium will result in a significant savings for new FHA borrowers. For example, if a borrower takes out a $200,000 loan with a 30-year term, the monthly mortgage insurance premium would decrease from $142 to $92. This means a savings of $50 per month, or $600 per year.

The reduction in the mortgage insurance premium is part of the Biden administration's efforts to increase access to affordable housing for all Americans. By making homeownership more affordable, the administration hopes to help bridge the wealth gap and create more opportunities for low-income and minority families.

Overall, the reduction in the annual mortgage insurance premium for FHA loans is good news for new homebuyers who are looking for affordable housing options. With this change, it will be easier for more people to achieve the American dream of homeownership.