Towards the end of February 2022 the Biden administration reported that they made a change in mortgage fees that will save around 850,000 home buyers around $800 on home financing cost. The advantage will be primarily for low and middle income and first time homebuyers. FHA loans will have a rate reduction from 0.85% to 0.55% on mortgage insurance premiums that are paid by new borrowers. 
The administration is using this tactic to help with the challenges in affordable housing around the country. The change will take place March 20, 2023 according to Marcia L. Fudge, Secretary of Housing and Urban Development. “As we reduce housing costs for people with FHA mortgages, we continue our work to address long standing disparities in homeownership,” Fudge says.
This is good news for all of the potential buyers that have been priced out of the housing market. Home financing has been on a dramatic rise within this year. In fact, mortgage rates have doubled from the same time a year ago. Since home prices have remained strong, many have not been able to purchase a home. According to HUD and the White House, first-time homebuyers make up 80%, and homebuyers of color make up over 25% of buyers.
FHA mortgages are perfect for those potential homebuyers that are having a hard time getting financed. FHA loans do require mortgage insurance but this lowers the risk for the lender. A lender takes on a risk when they qualify a borrower. FHA only regulates the loans from private lenders and will also ensure the loan for homebuyers with lower credit scores and smaller down payments.
This move is possible due to FHA’s mortgage insurance fund has accumulated reserves at a level that is more than five times the required threshold set by Congress, according to the White House. The rise in home prices and the huge volume of buyers have also played a hand in the decisions. HUD will not pass savings on to consumers without hurting FHA’s mortgage insurance fund.
“In this competitive market, new and low- to moderate-income buyers are often left behind. This reduction will help alleviate some of the financial stress those potential buyers encounter when purchasing a home and allow more people across the country to achieve the American dream of homeownership,” praises Kenny Parcell, the president of the National Association of Realtors.
