In a move that will make home loans more affordable, the Federal Housing Administration (FHA) announced today that it will reduce the annual premiums most of its borrowers pay on mortgage insurance premiums by 0.25 percentage points from 0.85% to 0.60%. The agency said that the new lower premium rates are projected to save new FHA-insured home owners an average of $500 this year.
NAHB supports this action to further boost the housing recovery and reduce the cost of housing for creditworthy borrowers, particularly for first-time home buyers. In response to FHA’s announcement, NAHB Chairman Ed Brady issued the following statement:
“NAHB commends the FHA for reducing its annual mortgage insurance premiums by 25 basis points to 0.6%. With mortgage rates rising in recent weeks, lower premiums will make home loans more affordable, particularly for creditworthy young families and first-time buyers. The new premium structure will also help to ease stubbornly tight credit conditions in the mortgage market, and represents sound policy given a recent actuarial report that shows that the agency continues to strengthen its financial reserves.”
The new premium will be effective for mortgages closed on or after Jan. 27, 2017. For a full schedule of the new premium rates announced today, read FHA’s mortgagee letter.
For additional information, contact Curtis Milton at NAHB at 800-368-5242 x8597.