FHA Mortgage Insurance Premiums Reduced This Week

January 31, 2015

What this Means for Homebuyers
This week, a new annual premium rate of the Federal Housing Administration (FHA) took effect, which reduced mortgage insurance premiums by 0.5 percentage point, from 1.35 percent to 0.85 percent. According to the FHA, this policy will translate into a $900 reduction in the annual mortgage payment for a first-time homebuyer.“This step is part of the President’s broader effort to expand reasonable lending to creditworthy borrowers and increase access to sustainable rental housing for families not ready or wanting to buy a home,” said a recent statement from The White House.Adam Dodd 3

The U.S. Department of Housing and Urban Development (HUD) has indicated that borrowers with case numbers assigned on or after January 26, 2015 will be eligible for reduced annual mortgage insurance premiums, and that the FHA will permit lenders to cancel existing case numbers and assign new case numbers so that borrowers who have yet to close on their loans may take advantage of the new premium reduction.

“This action will make homeownership more affordable for over two million Americans in the next three years,” said HUD Secretary Julian Castro.

For a FAQ sheet from the HUD, visit goo.gl/LkoVZb.