FHA Announces Reduction of Mortgage Insurance Premiums for FHA Loans Beginning March 20, 2023
On Wednesday, February 22, 2023, the Department of Housing and Urban Development (HUD) and the Biden-Harris Administration announced a 30-basis point reduction to the annual mortgage insurance premiums (MIP) charged to homebuyers who obtain an FHA-insured home loan. Applicable premiums may be reduced from 0.85% to 0.55%, resulting in borrowers seeing thousands of dollars in savings over the life of their loan.
How does this news impact prospective homebuyers?
For those looking to buy but have had concerns regarding affordability and high mortgage insurance payments, now may be a great time to look into your financing options again.
With a lower annual MIP, prospective homebuyers may benefit from:
- Greater buying power
- Lower monthly payments
- Overall cost savings
- Stronger ability to qualify
Why are they reducing the cost of mortgage insurance?
With homeownership being a principal source of wealth creation for most American households today, the Biden-Harris administration has taken this action to support their goals of making homeownership more accessible and affordable for working families across the nation.
In addition to the reduction of mortgage insurance premiums for FHA-insured loans, the Administration and HUD have taken a range of steps to make homeownership a reality for more Americans. HUD changed the FHA’s underwriting policies to allow lenders to use positive rental history when evaluating an applicant’s creditworthiness when applying for an FHA mortgage—making it easier for first-time homebuyers to qualify. In addition, HUD changed the way student loan debt is evaluated in FHA mortgage underwriting, enabling more borrowers who are making student debt payments to qualify for an FHA-insured home loan.
“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.”
– Marcia L. Fudge, HUD Secretary
To learn more about the FHA’s recent mortgage insurance reduction and to discover how you may be able to save when financing your dream PulteGroup home, reach out to your Pulte Mortgage Representative today!
