FHA Loans Are Getting Cheaper

It has been announced that the annual mortgage insurance premium will be reduced by 0.30 percentage points, from 0.85% to 0.55% for most new borrowers, which will save homebuyers and homeowners with new FHA-insured mortgages an average of $800 per year. The reduction in the premium is expected to lower housing costs for an estimated 850,000 homebuyers and homeowners in 2023. Homeownership is the primary source of wealth creation for most American households. This move is a significant step in making homeownership more attainable, particularly for first-time homebuyers who are less likely to have sufficient resources for a sizable down payment due to a longstanding gap in intergenerational wealth transfers. This cost-lowering measure will make buying a home more attainable and affordable for more low- and middle-income borrowers. Over the last several years, FHA’s mortgage insurance fund has accumulated reserves at a level that is more than five times the required threshold set by Congress. The premium reduction will take effect on March 20, and will be reflected in the President’s FY 2024 Budget.

https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/22/fact-sheet-biden-harris-administration-announces-action-to-save-homebuyers-and-homeowners-800-per-year/