ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Federal Housing Administration Lures Home Buyers with Lower Fees

Updated on January 9, 2015

White House Seeks to Jump-Start Home Buying

Home buyers in the Washington area can expect more favorable mortgage rates after the White

House announced this week the Federal Housing Administration will reduce its loan fees.

The White House estimated an additional 250,000 home buyers will take out FHA loans in the next three years because of this week’s announcement. Each of them is expected to save about $900 per year.

FHA annual premiums have increased five times since 2010, from 0.55 percent of loan value to 1.35 percent. The White House plans to reduce the fees to 0.85 percent by the end of January.

FHA loans are most popular among first-time home buyers. However, fees rose and credit restrictions tightened after the recession that began in 2008, putting them out of reach of many buyers.

Lenders admit they are turning away more customers but say it is necessary to avoid government fines.

The FHA has been under pressure from real estate industry groups, such as the National Association of Realtors, to lower its fees. Thirty industry groups, led by the Mortgage Bankers Association, wrote a letter to President Obama this week urging him to lower FHA fees.

Some fiscal conservatives say the White House decision increases the risk of a taxpayer bailout of the FHA in the future.

The FHA does not issue the loans. It insures lenders against defaulted loans. The insurance premiums are taken from fees the FHA imposes on loans it insures.

The FHA was hurt badly during the last recession as many borrowers turned to FHA-backed loans when credit restrictions tightened among other lenders. The number of FHA loans rose dramatically but so did the default rate, nearly depleting the agency’s cash reserves.

By 2013, the FHA was forced to seek a government bailout for the first time in its 80-year history when it drew $1.7 billion from the U.S. Treasury.

The announcement of lower fees this week means a borrower taking out a $200,000 loan can expect to pay $142 a month in FHA premiums, down from $225 a month now.

Among those who spoke out in favor of the new policy was Rep. Maxine Waters (D-CA), who said in a statement the FHA announcement is a positive step forward that opens the possibility of homeownership for more Americans, and provides existing homeowners with savings that are critical to securing the financial future of American families.

The Federal Housing Administration is lowering fees to help the housing market recover from recession.
The Federal Housing Administration is lowering fees to help the housing market recover from recession. | Source

FHA Helping or Hurting Economy?

Should the Federal Housing Administration lower its fees if there is a risk tax money might be used to subsidize its loan fees?

See results


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)