Biden – Harris Administration Announces Reduction in Annual Insurance Premium for FHA Home Buyers

The Biden – Harris Administration yesterday announced that the U.S. Department of Housing and Urban Development (HUD) would lower annual mortgage insurance premiums for Federal Housing Administration-insured home purchase loans. FHA explained the changes in further detail in a mortgagee letter released yesterday morning.

FHA will reduce its annual mortgage insurance premium by .3 percent, from .85 to .55 percent, for most borrowers. This premium is the monthly fee homeowners with FHA-insured mortgages pay to insure their mortgages. The administration estimates 850,000 home buyers and homeowners will benefit from the lower premiums in 2023 alone. The reduced premiums will apply to all loans endorsed on or after March 20.

In a statement, NCSHA commended the administration for its move. “Cutting the cost of FHA insurance will help more working families access affordable homeownership through state HFA programs and other financing options,” said NCSHA Executive Director Stockton Williams. “Today’s announcement by the administration will also open doors to homeownership opportunity for more households of color.”

NCSHA has urged FHA several times in recent years to consider reducing its mortgage insurance premiums, arguing that it would increase access to homeownership. FHA’s single-family mortgage insurance programs are key to state HFAs’ affordable homeownership efforts. In 2021, 61 percent of HFA program loans were insured by FHA.

Vice President Kamala Harris held an event with housing leaders at Bowie State University in Maryland yesterday afternoon to discuss the fee reduction, which NCSHA Director of Housing Advocacy and Strategic Initiatives Garth Rieman and other housing group representatives attended at the White House’s invitation.