FHA lowered its mortgage-insurance premium for borrowers by 30 basis points. The $117 monthly savings is based on a $467.7K home with 3.5% down.

I am pleased to share some great news for homebuyers in South Florida who are looking to secure a mortgage through the Federal Housing Administration (FHA).

The FHA recently announced that it will be lowering its mortgage-insurance premium (MPI) by 30 basis points. This is a significant reduction that will benefit about 850,000 borrowers over the next year, resulting in savings of $678 million overall.

For the average borrower in South Florida who is purchasing a one-unit, single-family home, this reduction will mean savings of over $1,400 per year or $117 per month. This is assuming a 3.5% down payment and a national median home price of $467,700. However, it is important to note that FHA loan borrowers often buy homes toward the lower end of the price range, and the average borrower is likely to see savings in the $800 per year or $67 per month range.

The MPI is a fee charged to FHA borrowers to offset the risk of foreclosures. The money goes into FHA's capital reserve, and federal law requires a capital reserve ratio of 2%. However, in their 2022 annual report to Congress, the FHA reported an 11% capital reserve ratio - 9% above the requirement. This allows the FHA to lower the premium for borrowers going forward.

The National Association of Realtors® (NAR) and other housing organizations have been advocating for a lower MPI, and their efforts have finally paid off. This reduction is excellent news for potential homebuyers, especially new and low- to moderate-income buyers who are often left behind in this competitive market. This will help alleviate some of the financial stress those potential buyers encounter when purchasing a home and allow more people across the country to achieve the American Dream of homeownership.

As a real estate agent serving the South Florida community, I believe that homeownership is an essential part of the American Dream, and this reduction in the MPI will make it more accessible to many who were previously unable to secure a mortgage. This is an excellent time to take advantage of this opportunity and start looking for your dream home.

Contact me today, and I will help you navigate the home-buying process and find the perfect home for you.