We shared the news a bit earlier this week—The Federal Housing Administration (FHA) is set to cut their insurance premium.

The FHA is an organization that does not actually provide loans, but provides insurance that protects lenders. This is to ensure lenders (ie- a mortgage company) has some measure of protection if a borrower runs into any complications. That could be anything from missing loan payments to defaulting on their loan.

There are a fair amount of requirements that Congress has established for the FHA. One of those is that the FHA has enough reserves to cover losses over a projected 30 years.

Now, over the past four years, the FHA has seen consistent and consecutive growth. Because of this, they have made the decision to share that growth with American families—in the form of savings.

The primary objective is to allow for greater credit access across the country. Lower insurance premiums allows for individuals (and families) significant savings.

All of this information was released this past Monday. And, on Monday, it was stated that borrowers who close on an FHA loan after January 27th of this year will pay 25 basis points less.


So what does this mean for you?

If you have been house hunting or even seeking out your various loan options, the home of your dreams may be closer than you think. With lower FHA insurance premiums, borrowers (like yourself) will be spending less each month, meaning you can afford a monthly payment you may not have been able to before.

To see what, exactly, this may look like for you, we recommend you talk to one of our loan officers directly. They can discuss your unique loan options, as well as the savings you may have in store with this lower FHA insurance premium.



By Natasha Mason