Proposed Changes in Mortgage Insurance Premiums Applicable to FHA Multifamily Insurance Programs

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Published

June 26, 2025

Issuing agencies

Housing and Urban Development Department

Abstract

On March 31, 2016, HUD published a notice reducing mortgage insurance premiums (MIPs) for qualifying loans under three newly established MIP rate categories: Green and Energy Efficient Housing, Affordable Housing, and Broadly Affordable Housing. On January 20, 2025, President Trump signed a presidential memorandum, "Delivering Emergency Price Relief for American Families and Defeating the Cost-of- Living Crisis", which directed agencies to deliver price relief to the American people, as well as an Executive Order on Unleashing American Energy. To meet these goals, this notice proposes to reduce MIPs to 0.25% for all FHA Multifamily Insurance Programs. This notice further proposes to eliminate the MIP categories established in 2016, which are misaligned with the presidential memoranda and would become economically obsolete.

Full Text

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<title>Federal Register, Volume 90 Issue 121 (Thursday, June 26, 2025)</title>
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[Federal Register Volume 90, Number 121 (Thursday, June 26, 2025)]
[Notices]
[Pages 27331-27333]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-11814]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6522-N-01]

Proposed Changes in Mortgage Insurance Premiums Applicable to FHA
Multifamily Insurance Programs

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: On March 31, 2016, HUD published a notice reducing mortgage
insurance premiums (MIPs) for qualifying loans under three newly
established MIP rate categories: Green and Energy Efficient Housing,
Affordable Housing, and Broadly Affordable Housing. On January 20,
2025, President Trump signed a presidential memorandum, ``Delivering
Emergency Price Relief for American Families and Defeating the Cost-of-
Living Crisis'', which directed agencies to deliver price relief to the
American people, as well as an Executive Order on Unleashing American
Energy. To meet these goals, this notice proposes to reduce MIPs to
0.25% for all FHA Multifamily Insurance Programs. This notice further
proposes to eliminate the MIP categories established in 2016, which are
misaligned with the presidential memoranda and would become
economically obsolete.

DATES: Comment Due Date: July 28, 2025.

ADDRESSES: Interested persons are invited to submit comments regarding
this notice. All submissions must refer to the above docket number and
title.

[[Page 27332]]

There are two methods for submitting public comments:
1. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the author maximum time to prepare and submit a comment, ensures
timely receipt by HUD, and enables HUD to make them immediately
available to the public. Comments submitted electronically through the
<a href="https://www.regulations.gov">https://www.regulations.gov</a> website can be viewed by other submitters
and interested members of the public. Commenters should follow
instructions provided on that site to submit comments electronically.
2. Submission of Comments by Mail. Members of the public may submit
comments by mail to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 7th Street
SW, Room 10276, Washington, DC 20410-0500. Due to security measures at
all federal agencies, however, submission of comments by standard mail
often results in delayed delivery. To ensure timely receipt of
comments, HUD recommends that comments submitted by standard mail be
submitted at least two weeks in advance of the deadline. HUD will make
all comments received by mail available to the public at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT: Margaret Lawrence, Deputy Director,
Office of Multifamily Production, Department of Housing and Urban
Development, 451 7th Street SW, Washington, DC 20410; telephone: 202-
402-2921 (this is not a toll-free number). HUD welcomes and is prepared
to receive calls from individuals who are deaf or hard of hearing, as
well as individuals with speech or communication disabilities. To learn
more about how to make an accessible telephone call, please visit:
<a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.

SUPPLEMENTARY INFORMATION:

I. Background

Section 203(c)(1) of the National Housing Act (the Act) authorizes
the Secretary to set the premium charge for insurance of mortgages
under the various programs in title II of the Act. The range within
which the Secretary may set such charges must be between one-fourth of
one percent per annum and one percent per annum of the amount of the
principal obligation of the mortgage outstanding at any time. (see 12
U.S.C. 1709(c)(1)). HUD's Multifamily Housing Mortgage Insurance
regulation at 24 CFR 207.254 provides that HUD must publish a notice of
future premium changes in the Federal Register and provide a 30-day
public comment period for the purpose of accepting comments on whether
the proposed changes are appropriate.

Overall MIP Rates

On January 20, 2025, President Trump signed a presidential
memorandum titled, ``Delivering Emergency Price Relief for American
Families and Defeating the Cost-Of-Living Crisis''. This presidential
memorandum orders the heads of all executive departments and agencies
to deliver emergency price relief to the American people, including by
pursuing appropriate actions to lower the cost of housing and expand
housing supply.
The 2016 notice represents the most recent previous changes in FHA
MIP and rate categories.

MIP Rate Categories

On January 28, 2016, HUD published a notice in the Federal Register
announcing proposed MIP changes for certain FHA Multifamily Housing
Insurance programs to promote Green and Energy Efficient Housing (81 FR
4926). On March 31, 2016, HUD published a final notice in the Federal
Register reducing MIPs for FHA qualifying Multifamily Housing Insurance
programs (81 FR 18473) and created a new Green/Energy Efficient Housing
category. On January 20, 2025, President Trump signed Executive Order
14154 titled ``Unleashing American Energy,'' which shifts agency
priorities away from policies that promote green and energy efficient
goals.
The 2016 notice also created two additional MIP rate categories of
Affordable Housing and Broadly Affordable Housing, each with reduced
MIP rates. However, the MIP rates for market rate housing were
explicitly left unchanged in the 2016 notice. On January 20, 2025,
President Trump signed a presidential memorandum titled, ``Delivering
Emergency Price Relief for American Families and Defeating the Cost-Of-
Living Crisis'', which orders broad cost relief for housing.

II. This Notice

Overall MIP Rates

In response to current market conditions, to lower the financing
cost, and to expand the supply of rental housing, HUD is proposing to
reduce MIP rates to 0.25% for all multifamily housing programs. MIP
rate changes may be applied to FHA multifamily mortgage insurance
applications submitted or amended on or after the effective date of a
notice announcing the new MIP rates, so long as the loan has not been
initially endorsed.
The proposed across-the-board MIP reductions are necessitated by a
sharp rise in construction costs and mortgage interest rates since
2021. Market rate property MIPs were explicitly unchanged in 2016 and
remain cost prohibitive. HUD data shows that from March 2024 to March
2025, only 4% of Section 221(d)(4) and 223(f) loan closings were for
market rate properties without green or affordable incentive
qualification, suggesting severe underutilization due to high cost. HUD
proposes to expand the MIP cost-saving benefits to all property types,
to immediately lower financing costs and stimulate rental housing
development.
In conjunction with this proposal, HUD has completed an impact
analysis to the FHA insurance fund, which showed acceptable results.
HUD's robust risk-based underwriting process and very low loan
insurance claim rates support the proposed expansion of reduced MIP
rates.
HUD is soliciting comment on the revisions to these overall MIP
rates.

Summary Table of FHA Multifamily Mortgage Insurance Premiums By Section
of National Housing Act

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Current upfront Proposed upfront
FHA Multifamily Mortgage capitalized MIP capitalized MIP * Current annual MIP Proposed annual MIP
Insurance Program * (basis points) (basis points) (basis points) (basis points)
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Section of National Housing
Act:
207 Multifamily New Constr/ 70 25................. 70................. 25.
Sub Rehab w/o LIHTC.

[[Page 27333]]

207 Manufactured Home Parks 70 25................. 70................. 25.
w/o LIHTC.
221(d)(4) New Constr/Sub 65 25................. 65................. 25.
Rehab w/o LIHTC.
220 Urban Renewal Housing w/ 70 25................. 70................. 25.
o LIHTC.
213 Cooperative............ 70 25................. 70................. 25.
207/223(f) Refi or Purchase 100 25................. 60................. 25.
for Apts. w/o LIHTC.
223(a)(7) Refi of Apts. w/o 50 25................. 50................. 25.
LIHTC.
231 Elderly Housing w/o 70 25................. 70................. 25.
LIHTC.
241(a) Supplemental Loans 95 25................. 95................. 25.
for Apts. coop w/o LIHTC.
Section 542(b) Risk-Sharing 25 25................. 25................. 25.
**.
Section 542(c) Risk-Sharing 25 25................. 25................. 25.
**.
BROADLY AFFORDABLE HOUSING, All 25 Eliminated......... 25................. Eliminated.
Sections of National Housing
Act.
AFFORDABLE: INCLUSIONARY 35 Eliminated......... 35................. Eliminated.
VOUCHERS, All Sections of
National Housing Act.
GREEN/ENERGY EFFICIENT HOUSING, 25 Eliminated......... 25................. Eliminated.
All Sections of National
Housing Act.
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Table Footnotes:
* Upfront premiums for multifamily refinancing programs are capitalized and based on the first year's annual MIP
for the applicable rate category. Upfront premiums for multifamily new construction and substantial
rehabilitation programs insuring advances are capitalized and based on the annual MIP for the applicable rate
category for the entire construction period, rounded up to the nearest whole year.
** All loans originated by Housing Finance Agencies under FHA's Section 542(c) Risk-Sharing program, and by
Qualified Participating Entities including Fannie Mae and Freddie Mac under FHA's Section 542(b) Risk-Sharing
program, will continue to have a 25 basis point MIP rate, multiplied by the percentage risk assumed by FHA as
shown in table below:

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FHA percent of Upfront capitalized MIP Annual MIP basis points
Program risk share basis points (bps) (bps)
----------------------------------------------------------------------------------------------------------------
542(b).................................. 50 12.5 (25 bps x 50 percent) 12.5 (25 bps x 50
percent).
542(c).................................. 50 12.5 (25 bps x 50 percent) 12.5 (25 bps x 50
percent).
75 18.75 (25 bps x 75 18.75 (25 bps x 75
percent). percent).
90 22.5 (25 bps x 90 percent) 22.5 (25 bps x 90
percent).
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MIP Rate Categories

This notice announces that HUD proposes to eliminate the Green and
Energy Efficient Housing, Affordable, and Broadly Affordable MIP rate
categories on the effective date of a notice announcing the new MIP
rates, as discussed above. Under this proposed notice, these MIP
categories become economically obsolete, because MIP rates are
uniformly proposed at 0.25%.
HUD has reconsidered its 2016 position of specifying MIP rates
across four categories and 11 loan programs, resulting in 35 individual
MIP rates. HUD's current position is that this approach is overly
complicated and burdens decision making for borrowers and lenders. An
across-the-board MIP rate significantly simplifies cost-benefit
analysis considerations used by owners, developers, and lenders.
HUD is aware that differing MIP rates among multifamily programs
may contribute to utilization imbalances and underserved rental housing
segments. From March 2024 to March 2025, 96% of loan closings under
Section 221(d)(4) and 223(f) utilized one of these reduced MIP
incentive categories. Only 4% of loan closings were for market rate
properties without green or affordable incentive qualification. HUD
seeks to rebalance loan program utilization, currently skewed by the
2016 incentive categories, to benefit all rental housing segments.
Elimination of these three MIP categories will also eliminate their
respective specialized requirements as outlined in the 2016 Rules. The
overlay requirements pertaining to the 5% loan fee limitations for the
Green and Energy Efficient Housing and Broadly Affordable categories
are eliminated and standard HUD program handbook requirements apply to
new loan fees, primarily the Multifamily Accelerated Processing Guide
(``MAP Guide'', HUD Handbook 4430.G). Additionally, for all loans
closed under a Green and Energy Efficient Housing MIP rate, the
requirements to evidence the initial green building achievement and the
annual reporting of energy performance are fully eliminated. Overall,
these requirements were burdensome and resulted in higher overall
development costs, which is inconsistent with presidential memoranda
and reduces new construction feasibility.

III. Environmental Review

This notice involves the establishment of rate or cost
determinations and related external administrative requirements that do
not constitute a development decision affecting the physical condition
of specific project areas or building sites. Accordingly, under 24 CFR
50.19(c)(6), this notice is categorically excluded from environmental
review under the National Environmental Policy Act of 1969 (42 U.S.C.
4321).

Frank Cassidy,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2025-11814 Filed 6-25-25; 8:45 am]
BILLING CODE P

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