White House Fact Sheet: Regulatory Reform to Reduce Costs of Homeownership

As part of his continuing effort to reform and streamline Government regulations, the President today announced that the Department of Housing and Urban Development (HUD) will release today an important reform designed to reduce the cost of homeownership and thereby to spur residential construction.

The President acknowledged that this reform, which does not require congressional action, will have a more limited impact than the $5,000 tax credit for first-time homebuyers that he has proposed to Congress. But the President declared, "I will continue to do everything I can on my own to get the economy moving, even if Congress sits on its hands."

The administrative change released today will reduce mortgage insurance premiums on 15-year FHA-insured mortgages. HUD estimates that for those who choose a 15-year mortgage, this change will reduce the up-front FHA insurance premium by an average of $650 (based on an average loan of $65,000). It will also reduce the annual insurance premium by $165 to $325 -- for a total savings of approximately $2,500 to $6,000 over the life of the loan. This change is made possible by HUD's determination that 15-year mortgages pose a significantly smaller risk to the FHA insurance fund than longer term mortgages.