In a statement released Wednesday, the White House said the MIP cut will save homebuyers and homeowners with new FHA-insured mortgages an average of $800 per year, lowering housing costs for an estimated 850,000 homebuyers and homeowners in 2023.
FHA point reduction
The FHA loan, or Federal Housing Authority loan, is offered by many lenders as a lower down payment, cost-effective mortgage. With an FHA loan, there is an annual premium each year for borrowers, also known as MIP (Mortgage Insurance Premium). The White House has now authorized a reduction of its annual mortgage insurance premium by 0.30 percentage points, from 0.85% to 0.55% for most new borrowers.
How does this benefit FHA borrowers?
The biggest benefit of this point reduction is that it has the potential to save borrowers using the FHA loan an average of $800 per year! This reduction will begin for all transactions endorsed on or after March 20, 2023. The intention of this plan is to make homeownership more attainable for the average American. FHA loans, which accounted for 7.5% of home sales in the third quarter of 2022, are targeted at homebuyers who otherwise may not be able to achieve homeownership.
With this reduced cost for homeownership, it is our hope that prospective homeowners feel encouraged to reach out to their local lender to learn about their options.
