HUD tweaks mortgage bond rates, lenders shrug
Published Date: 10/13/2026
Notice
Summary
Starting July 1, 2026, the interest rates on FHA-insured mortgage debentures are set at 4.5% for Section 221(g)(4) loans and 5% for other loans. These changes affect lenders and investors involved with FHA loans and will last for six months. This update helps keep mortgage insurance programs running smoothly and ensures fair returns on these government-backed loans.
Analyzed Economic Effects
4 provisions identified: 2 benefits, 0 costs, 2 mixed.
Section 221(g)(4) Debentures Bear 4.5%
If you are a lender or investor receiving debentures issued under Section 221(g)(4) during the 6-month period beginning July 1, 2026, those debentures will bear interest at 4.5 percent. This interest rate applies for the 6-month period beginning July 1, 2026 and through the period ending January 1, 2027.
Other FHA Debentures Set at 5%
Debentures issued with respect to FHA-insured loans or mortgages under provisions other than Section 221(g)(4) that have a commitment or endorsement date within the 6-month period beginning July 1, 2026, will bear interest at 5 percent. For these non-221(g)(4) debentures the applicable rate is the higher of the rate in effect on the commitment date or the endorsement date.
Cash Claim Rate for Section 203/234 Loans
For insurance claims paid in cash on mortgages insured under Section 203 or 234 and endorsed for insurance after January 23, 2004, the debenture interest rate used to compute the cash payment is the monthly average yield in the month the mortgage defaulted on U.S. Treasury securities adjusted to a 10-year constant maturity, as reported in Federal Reserve Statistical Release H-15. This is the rate HUD will use to calculate the interest component of cash claim payments.
Multifamily Cash Claims Use Commitment/Endorsement Rate
For multifamily insured mortgages, when an insurance claim is paid in cash the debenture interest is paid from the date of loan default at the debenture rate in effect at the time of the loan commitment or endorsement (or initial endorsement if more than one), whichever is higher. HUD implements this rule in its multifamily regulations and will apply it to cash claim calculations.
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