Notice2025-18379
Changes in Mortgage Insurance Premiums Applicable to FHA Multifamily Insurance Programs
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Published
September 23, 2025
Issuing agencies
Housing and Urban Development Department
Abstract
This notice makes minor revisions to and finalizes HUD's prior notice published on June 26, 2025, entitled "Proposed Changes in Mortgage Insurance Premiums Applicable to FHA Multifamily Insurance Programs" (FR-6522-N-01). That notice proposed revisions to HUD's 2016 notice that reduced 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 reduces MIPs to 0.25% for all FHA Multifamily Insurance Programs. This notice further eliminates the MIP categories established in 2016, which are misaligned with the presidential memoranda and have become economically obsolete.
Full Text
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<title>Federal Register, Volume 90 Issue 182 (Tuesday, September 23, 2025)</title>
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[Federal Register Volume 90, Number 182 (Tuesday, September 23, 2025)]
[Notices]
[Pages 45789-45791]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18379]
[[Page 45789]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6522-N-02]
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: This notice makes minor revisions to and finalizes HUD's prior
notice published on June 26, 2025, entitled ``Proposed Changes in
Mortgage Insurance Premiums Applicable to FHA Multifamily Insurance
Programs'' (FR-6522-N-01). That notice proposed revisions to HUD's 2016
notice that reduced 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
reduces MIPs to 0.25% for all FHA Multifamily Insurance Programs. This
notice further eliminates the MIP categories established in 2016, which
are misaligned with the presidential memoranda and have become
economically obsolete.
DATES: Applicability Date: The revised MIP will be effective for any
FHA multifamily mortgage insurance applications submitted or amended on
or after October 1, 2025, so long as the loan has not been initially
endorsed.
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.
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.
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. On January
20, 2025, President Trump also signed Executive Order 14154 titled
``Unleashing American Energy,'' which shifts agency priorities away
from policies that promote green and energy efficient goals.
On June 26, 2025, HUD published a notice (90 FR 27330) that
proposed to reduce MIPs to 0.25% for all FHA Multifamily Insurance
Programs and eliminate the MIP categories established in 2016, which
are misaligned with the presidential memoranda and Executive Order
14154 and have become economically obsolete.
II. Public Comments
The public comment period on the June 26, 2025 notice closed on
July 28, 2025 and HUD received 14 public comments by the close of the
comment period. Comments were submitted by members of the real estate
industry, including mortgage lenders, home builders, and others,
private citizens, and other interested parties. All public comments can
be found on <a href="http://www.regulations.gov">www.regulations.gov</a> under the docket number FR-6522-N-02.
The following presents the key issues raised by commenters and HUD's
response to these issues.
Requested Revisions for Clarity
A few comments proposed changes to the notice that HUD has adopted.
Commenters stated that the reference to ``w/o LIHTC'' in the summary
table of new MIP rates is unnecessary and should be deleted for greater
clarity. One commenter also stated that additional clarification
regarding the ongoing nature of the green requirements was necessary
and that HUD should explicitly clarify that green regulatory riders are
eliminated.
HUD Response: HUD agrees with these comments and has removed the
reference to ``w/o LIHTC'' in this final notice. HUD also agrees with
commenter's suggestion to explicitly clarify that green regulatory
riders are eliminated and does so now.
Requested Revisions To Further Reduce or Eliminate MIP Rates
Some commenters requested elimination or the further reduction of
MIP rates. One commenter suggested that HUD remove all MIP rates.
Another commenter stated that the MIPs should be dropped for all FHA
mortgages. Additionally, some commenters stated that MIP rates should
be retroactively reduced.
HUD Response: HUD is currently unable to remove MIP rates given
that there are minimum rates required by statute. This notice does
reduce rates to their statutory minimum for all FHA Multifamily
Insurance Programs. Revising MIP rates for other programs is outside of
the scope of this current
[[Page 45790]]
notice. HUD declines to retroactively reduce the MIP rate on initially
endorsed loan closings because this would have an unfavorable impact on
HUD's insurance program. HUD relies on the agreed-to insurance premium
rates at the initial loan closing to produce revenue to offset
insurance claims, ultimately protecting taxpayer dollars.
Opposition to the Proposed Revisions
Some commenters opposed the changes within the notice. One
commenter stated that retrofitting buildings for energy efficiency is a
smart and strategic investment for its many benefits, including cost
savings and increased property values. Another commenter stated that
the benefits of green building outweigh the costs of compliance and
certification, which are typically less than 1% of total construction
costs. Another commenter stated that the Green and Energy Efficient
Housing MIP rate helps reduce home ownership costs through lower energy
bills while also supporting HUD's fiduciary responsibility to protect
against mortgage loan default.
HUD Response: HUD notes that the commenters make reasonable
arguments in favor of energy efficient designs for new construction and
existing building component retrofits. However, HUD believes that the
green building MIP rates that were introduced in 2016 are no longer
necessary because of owner-driven cost-benefit analysis in investment
decisions and the successful maturation of the energy-efficient
building market. While the initial implementation of the 2016 Green MIP
rate served as a government-supported catalyst, designed to stimulate
the adoption of energy-efficient technologies and practices within the
multifamily housing sector, the market today is substantially different
than it was nearly a decade ago. Then energy-efficient components were
often accompanied by a significant cost premium, and developer
awareness of their long-term operational benefits was less pronounced.
In that context, a financial incentive in the form of a reduced MIP
rate was a prudent policy tool to overcome initial market barriers and
demonstrate the viability of sustainable construction and retrofitting.
In today's market, investment in energy efficient building design
should be an owner's discretionary, cost-benefit decision. Property
owners and investors are best positioned to conduct a thorough cost-
benefit analysis tailored to the specific financial and operational
realities of their assets. Today, sophisticated energy modeling tools
and a competitive market of service companies empower owners to make
informed, data-driven decisions. Mandating or preferentially
incentivizing these choices through a federal mortgage loan insurance
program distorts decision making. In some cases, it may inadvertently
encourage building components or design choices that may be suboptimal
for a specific property's market or building lifecycle.
HUD's position is that the MIP incentive has achieved its purpose
and is no longer necessary after nearly a decade of market maturity.
Continuing the MIP incentive program maintains unnecessary complexity
in the MIP rate structure. As articulated in the rationale for this
change, simplifying the FHA's multifamily insurance offerings and
establishing a lower, uniform MIP rate for all borrowers serves the
broader and more pressing policy goal of increasing the overall supply
of rental housing.
General Support for the Proposed Revisions
Lastly, HUD received several comments supporting the proposed
changes. HUD appreciates the commenters' feedback and support for this
proposal.
III. This Notice
Overall MIP Rates
In response to current market conditions, to lower the financing
cost, and to expand the supply of rental housing, this notice reduces
MIP rates to 0.25% for all multifamily housing programs. MIP rate
changes will be applied to FHA multifamily mortgage insurance
applications submitted or amended on or after the effective date of
this notice, so long as the loan has not been initially endorsed.
These 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. As explained in the June 26, 2025, notice proposing
this revision, 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. Through this
notice, HUD expands the MIP cost-saving benefits to all property types,
to immediately lower financing costs and stimulate rental housing
development.
In conjunction with the proposed notice published on June 26, 2025,
HUD 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 this expansion of
reduced MIP rates.
Summary Table of FHA Multifamily Mortgage Insurance Premiums by Section of National Housing Act
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Prior upfront New upfront
FHA multifamily mortgage insurance capitalized MIP capitalized MIP Prior annual MIP New annual MIP
program * (basis points) * (basis points) (basis points) (basis points)
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Section of National Housing Act:
207 Multifamily New Constr/Sub Rehab 70 25 70 25
207 Manufactured Home Parks......... 70 25 70 25
221(d)(4) New Constr/Sub Rehab...... 65 25 65 25
220 Urban Renewal Housing........... 70 25 70 25
213 Cooperative..................... 70 25 70 25
207/223(f) Refi or Purchase for Apts 100 25 60 25
223(a)(7) Refi of Apts.............. 50 25 50 25
231 Elderly Housing................. 70 25 70 25
241(a) Supplemental Loans for Apts. 95 25 95 25
coop...............................
Section 542(b) Risk-Sharing **...... 25 25 25 25
Section 542(c) Risk-Sharing **...... 25 25 25 25
Broadly Affordable Housing, All Sections 25 Eliminated 25 Eliminated
of National Housing Act................
[[Page 45791]]
Affordable: Inclusionary Vouchers, All 35 Eliminated 35 Eliminated
Sections of National Housing Act.......
Green/Energy Efficient Housing, All 25 Eliminated 25 Eliminated
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:
------------------------------------------------------------------------
Upfront
FHA percent of capitalized MIP Annual MIP
Program risk share basis points basis points
(bps) (bps)
------------------------------------------------------------------------
542(b)............... 50 12.5 (25 bps x 12.5 (25 bps x
50 percent). 50 percent).
542(c)............... 50 12.5 (25 bps x 12.5 (25 bps x
50 percent). 50 percent).
75 18.75 (25 bps x 18.75 (25 bps x
75 percent). 75 percent).
90 22.5 (25 bps x 22.5 (25 bps x
90 percent). 90 percent).
------------------------------------------------------------------------
MIP Rate Categories
By this notice, HUD eliminates the Green and Energy Efficient
Housing, Affordable, and Broadly Affordable MIP rate categories
effective on the date of this notice. Under this notice, these MIP
categories become economically obsolete because MIP rates are uniformly
set 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 also eliminates their
respective specialized requirements as outlined in the 2016 notice. 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, all green-
related requirements, including evidence of the initial green building
achievement, the annual reporting of energy performance, and executed
regulatory rider pertaining to green requirements, are fully eliminated
and are no longer of force and effect. Overall, these requirements were
burdensome and resulted in higher overall development costs, which is
inconsistent with presidential memoranda and reduces new construction
feasibility.
IV. 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. 2025-18379 Filed 9-22-25; 8:45 am]
BILLING CODE 4210-67-P
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