An Estimated 850,000 Homebuyers Affected by Suspension of FHA Mortgage Rate Reduction. Here’s What You Need to Know:

house leaning on dollar signA summary from a letter from the National Association of REALTORS®; click here to read the full letter from NAR to Dr. Ben Carson, Housing and Urban Development Secretary Designate.


  • Trump administration has suspended the Federal Housing Administration’s (FHA) 25 basis point reduction of the FHA Annual Mortgage Insurance Premium rates for mortgages with a closing/disbursement date on or after January 27, 2017.
  • FHA occupies a critical role in the nation’s housing finance system, with a mission to ensure access to mortgage credit is available to all Americans, in particular groups traditionally underserved by the private market, including low to moderate-income, minority, and first-time homebuyers.
  • The National Association of REALTORS® estimates that the premium reduction would have reduced costs for 750,000 to 850,000 homebuyers in 2017 with mortgages backed by the FHA.
  • An additional 30,000 to 40,000 homebuyers are now shut out.

Impact on FHA

  • Suspending the premium reduction has consequences for the business of FHA.
  • Lower fees helped FHA to retain better borrowers from refinancing to private mortgage insurers. It helped to improve affordability allowing many previously sidelined borrowers to qualify for a home purchase.

What needs to be done

  • NAR urges FHA to reinstate the 25 basis point premium reduction and remove the life of loan premium as soon as possible.
  • Homeownership is a key element of the American Dream and FHA makes that dream possible for millions of Americans.
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