HUD recentlyannounceda reduction to the annual mortgage insurance premium charged to borrowers with FHA-insured loans. HUD estimates that the reduction will save FHA borrowers on average $800 annually. HUD also released Mortgagee Letter 2023-05 addressing the premium reduction, and a Factsheet addressing other steps that HUD has taken to make homeownership more affordable.
The premium reduction applies to all Title II forward mortgages, except for mortgage loans insured under section 247 of the National Housing Act (Hawaiian Homelands), which do not require an annual mortgage insurance premium, and streamline refinance and simple refinance mortgage loans used to refinance a previous FHA-insured loan endorsed on or before May 31, 2009. The premium reduction is effective for mortgage loans endorsed on or after March 23, 2023. There were no changes to the amount of the FHA upfront mortgage insurance premium.
The HUD announcement of the premium reduction includes the following:
“This action supports the Biden-Harris Administration’s goals of making homeownership more accessible and affordable for the nation’s working families, particularly households of color for whom FHA-insured mortgages have been a cornerstone for access to homeownership. This action will help address historic disparities in homeownership, where homebuyers of color have been underrepresented.”