The price that brokers show borrowers on rate sheets, if they exist anymore, or through a pricing engine, is made up of several factors. One component, depending on the program and loan to value, is mortgage insurance expense.

There is some recent good news that Orion wants to share and discuss! The Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), announced a 30-basis point reduction to the annual mortgage insurance premiums (annual MIP) charged to homebuyers who obtain an FHA-insured mortgage. The premium will be reduced from 0.85% to 0.55% for most homebuyers seeking an FHA-insured mortgage, which could mean an estimated savings of $678 million for American families in aggregate by the end of 2023 alone. The reduction will benefit an estimated 850,000 borrowers over the coming year, saving these families an average of $800 annually.

A good percentage of the loans Orion’s brokers do are through the FHA program. The reduction will apply to nearly all FHA-insured Single Family Title II forward mortgages and is applicable to all eligible property types including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.

According tothe announcement, the reduction is intended to build on steps taken by the Biden administration to make homeownership more affordable and accessible, particularly for households of color, and could save, as noted above, an estimated 850,000 borrowers an average of $800 annually. Last September, HUD modified FHA’s underwriting policies to allow lenders to consider a first-time homebuyer’s positive rental payment history as an additional factor indetermining eligibility for an FHA-insured mortgage, and in March, the Property Appraisal and Valuation Equity Task Force outlined steps for addressing alleged racial bias in home appraisals.

What does this mean for Orion’s brokers and your clients? The cost of financing through this program has come down. This effort by the government to help with housing affordability should be applauded and will help would-be homeowners.

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