FHA Mortgage Insurance Just Got Cheaper - 2/22/2023

This is the news we've been waiting for! An FHA mortgage just got cheaper!

HUD (Department of Housing and Urban Development) just released new guidelines dropping the mortgage insurance cost on a 3.5% down payment mortgage loan from .85 to .55 --- which means a $400k loan saves $100 per month compared to the old rule.

“At a time when budgets are tight and homeownership is out of reach for too many, FHA’s premium reduction will allow more households to access the stability and wealth creation of homeownership, particularly the first-time homebuyers and families of color who rely heavily on affordable FHA-insured mortgages,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon. “For many families, the savings will make the difference in their ability to purchase the home of their choice.”

This is a significant increase in buying power for home buyers! Basically, mortgages are approved/denied based on comparing someone's total debts (including the new home monthly payment) to their total gross income - AKA debt-to-income ratio. With the decreased cost of mortgage insurance on FHA loans, homebuyers can afford to buy MORE house!

Source: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_23_041