February 23rd, 2023
As a mortgage company, we are thrilled to hear about the latest announcement from the Biden-Harris Administration. The new policy is expected to benefit homebuyers and homeowners with new FHA-insured mortgages by reducing their average housing costs by $800 annually. This is great news, especially for low- and middle-income borrowers who can now achieve homeownership more affordably.
The reduction in the annual mortgage insurance premium by 0.30 percentage points, from 0.85% to 0.55% for most new borrowers, means homeowners with FHA-insured mortgages will pay less for their monthly mortgage insurance premiums, which will help them to manage their finances more effectively. The FHA insures loans with a small down payment and more flexible underwriting, making it possible for families to start building wealth through homeownership earlier than they otherwise might.
The reduction in the annual mortgage insurance premium will also help first-generation homebuyers and first-time homebuyers of color, who are less likely to have sufficient resources for a sizeable down payment due to a longstanding gap in intergenerational wealth transfers. The move is a significant step in making homeownership more attainable and affordable for them.
The announcement also comes on the heels of other policy measures that the Biden-Harris Administration has put in place to promote housing stability and affordability. The Administration has implemented a series of measures to protect homeowners from foreclosure and help struggling homeowners catch up on their mortgage payments and utility costs. They have also established a national eviction prevention infrastructure, providing 8 million payments to households in danger of eviction.
Additionally, HUD has taken several steps to make homeownership a reality for more Americans. They have changed FHA’s underwriting policies, expanded access to housing counseling, and changed the way in which student loan debt is evaluated in FHA mortgage underwriting.
In conclusion, the new policy announced by the Biden-Harris Administration is a welcome development that will benefit homebuyers and homeowners with new FHA-insured mortgages. This move will make homeownership more attainable and affordable for low- and middle-income borrowers, particularly for first-generation homebuyers and first-time homebuyers of color. We look forward to seeing more steps taken to promote housing stability and affordability in the future.