Mortgage Insurance Freedom Act

FHA mortgage insurance ends at 78%

If enacted, new FHA borrowers would stop paying annual mortgage insurance when the remaining insured balance is 78% or less of the lower of the home’s sale price or its appraised value at origination. The balance used would exclude the part from past FHA premiums. This would only apply to mortgages endorsed after enactment. If the FHA insurance fund’s capital falls below 2%, HUD could keep charging premiums on loans that were being charged on that date, but loans that had already stopped would stay stopped. HUD would have 180 days to set rules and a way for borrowers to show they meet the 78% test, plus outreach to explain it.