--- title: A Change to Mortgage Insurance Fees Could Save You up to $1,500 Annually description: The White House announced a reduction in mortgage insurance fees on FHA loans that could save homebuyers hundreds annually. authors: - name: Leslie Cook role: Editor, Real Estate url: https://money.com/author/leslie-cook/ bio: Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. She also writes about home renovation trends and tips. education: Bryn Mawr College, BA History at_money_since: 2019 articles: 797 covers: - Mortgages - Banking - Credit - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/LeslieLCook - https://www.linkedin.com/in/leslie-cook-9829b9198/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Mortgages - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-02-23T18:43:57.000Z' modified: '2024-01-10T14:36:45.000Z' section: Mortgages tags: - News word_count: 504 canonical: https://money.com/mortgage-insurance-fees-change-fha-loans/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Collage of a couple looking at a house for sale with moving boxes in the background](https://img.money.com/2023/02/News-Lower-Mortgage-Insurance-fee.jpg) There's some good news on the horizon for buyers struggling to afford a house. On Wednesday, the Biden-Harris administration [announced](https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/22/fact-sheet-biden-harris-administration-announces-action-to-save-homebuyers-and-homeowners-800-per-year/) a reduction in the mortgage insurance premium charged on loans backed by the Federal Housing Administration. The change is set to go into effect on March 20 and is expected to shave an average of $800 per year off mortgage payments for new buyers and current homeowners still paying off eligible loans. The mortgage insurance premium (MIP) on [FHA loans](https://money.com/what-is-an-fha-loan/) will be reduced by 0.30 percentage points, from 0.85% to 0.55% of the loan amount. MIP is a required fee that is designed to protect [mortgage lenders](https://money.com/best-mortgage-lenders/) in case a borrower falls behind or defaults on the home loan. Here are some of the big takeaways from the change: - Lower insurance premiums will make homeownership more accessible to middle and low income borrowers. - It is estimated the change will benefit up to 850,000 homebuyers and homeowners this year. - Borrowers will save an average of $800 per year on their monthly mortgage payments. - Some buyers may be able to save up to $1,500 per year, depending on their location and the loan amount. ## Examples of potential savings in different cities - Detroit, Michigan: A buyer purchasing a home with a $200,000 mortgage will save $600 per year. - Cincinnati, Ohio: A buyer purchasing a home with a $300,000 mortgage will save $900 per year. - Phoenix, Arizona: A buyer purchasing a home with a $400,000 mortgage will save $1,200 per year. - Atlanta, Georgia: A buyer purchasing a home with a $500,000 mortgage will save $1,500 per year. The housing market has been extremely challenging for borrowers over the last three years. Inventory shortages, [high home prices](https://money.com/cities-home-prices-rising-most/) and [bidding wars](https://money.com/bidding-wars-housing-market-recovery/) that were the hallmark of the pandemic housing market made it more difficult for many borrowers to find a home they could afford. More recently, potential homebuyers have been facing a new challenge with [mortgage rates](https://money.com/current-mortgage-rates/) that are almost double what they were a year ago. The MIP reduction is an additional step in the Biden-Harris administration’s efforts to increase the opportunity for homeownership for potential buyers who may not have the resources to make a sizable [down payment](https://money.com/5-ways-to-afford-down-payment/) or afford the monthly costs of a home loan. The move is especially important for [first-time homebuyers](https://money.com/first-time-homebuyer-programs/), who make up more than 80% of all FHA borrowers. People of color, who [lag behind in homeownership rate](https://money.com/black-homeownership-gap-grows/) compared to white buyers, make up more than 25% of FHA buyers. Other recent initiatives include changes to underwriting policies that allow lenders to consider a positive rental payment history when determining a borrower's creditworthiness, increasing access to housing counseling services and changing the way student loan debt is evaluated during the application process. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/mortgage-insurance-fees-change-fha-loans/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Mortgages", "item": "https://money.com/mortgages/" }, { "@type": "ListItem", "position": 3, "name": "FHA Loans", "item": "https://money.com/fha-loans/" }, { "@type": "ListItem", "position": 4, "name": "A Change to Mortgage Insurance Fees Could Save You up to $1,500 Annually" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/mortgage-insurance-fees-change-fha-loans/#webpage", "url": "https://money.com/mortgage-insurance-fees-change-fha-loans/", "name": "A Change to Mortgage Insurance Fees Could Save You up to $1,500 Annually", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-02-23T18:43:57.000Z", "mainEntity": { "@id": "https://money.com/mortgage-insurance-fees-change-fha-loans/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/mortgage-insurance-fees-change-fha-loans/#breadcrumb" }, "dateModified": "2024-01-10T14:36:45.000Z" }, { "@type": "NewsArticle", "headline": "A Change to Mortgage Insurance Fees Could Save You up to $1,500 Annually", "articleSection": "Mortgages", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/02/News-Lower-Mortgage-Insurance-fee.jpg", "width": 2880, "height": 1920, "caption": "News-Lower-Mortgage-Insurance-fee" } ], "author": [ { "@type": "Person", "name": "Leslie Cook", "url": "https://money.com/author/leslie-cook/", "@id": "https://money.com/author/leslie-cook/#author", "description": "Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. 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