In a long-awaited attempt to ease housing affordability concerns for cost-burdened homeowners and buyers, the Biden administration introduced a new plan on Wednesday to help low-income and first-time homebuyers save an average of $800 per year on mortgage insurance costs, Forbes reports. Under the new initiative, the Federal Housing Administration will reduce mortgage insurance premiums by 0.3 percentage points to 0.55% for FHA-insured mortgages.
The program is set to begin on March 20, and will help an estimated 850,000 U.S. households save an average of $800 in the year ahead, the White House claims.
FHA-insured mortgages, which accounted for 7.5% of home sales in the third quarter of 2022, are targeted toward first-time homebuyers and offer more flexible credit requirements than other types of mortgages, effectively opening the door to homeownership for individuals who may not otherwise be eligible.
According to the White House, more than 80% of FHA borrowers are first-time homeowners, and over 25% of the homebuyers are people of color; the program does not have a minimum income level to qualify, but debt levels and credit ratings are still taken into account.