FHA to cut insurance rates on multifamily mortgages

multifamily housing

In an effort to increase the amount of affordable rental housing in the U.S., the Federal Housing Administration (FHA) recently announced plans to lower their insurance rates for multifamily mortgages.

The rate reductions, announced in late January 2016, will take effect on April 1, 2016, and will directly impact the FHA’s Multifamily Housing Programs and properties that house low- and moderate-income families. This will also impact FHA developments that are installing energy-efficient systems or being built within federal energy guidelines.

“Families across the country are struggling through an affordable housing crisis,” said U.S. Housing and Urban Development (HUD) Secretary Julian Castro. “By reducing our rates, this Administration is taking a significant step to encourage the preservation and development of affordable and energy efficient housing in communities large and small. This way, hard-working families won’t have to make the false choice between quality or affordable housing.”

“Affordable Housing Crisis”

In case you haven’t noticed, rental rates in the U.S. have skyrocketing over the last few years, making it difficult for many Americans to find affordable housing unless they have the means to buy a home instead. While buying is generally considered a more financially savvy move, there are still some people who are not yet ready to become homeowners. Unfortunately, those renters who are also living in cities with high housing demand are often faced with paying rents much higher than the typical monthly mortgage payment.

According to data from Rent Jungle, a website that compiles rental information across the U.S., the average rent in Raleigh, NC is $1,040. By contrast, the median sale price for a home in Raleigh is $175,000, according to Trulia, a popular real estate site. If you were to buy a home at that price, your mortgage payment would likely be around $660.34/month.* That’s nearly $380 less than the median rent.

With this new policy in place, perhaps it will help slow the rental rate increases and encourage more investors to purchase more affordable multifamily properties.

Thinking of investing in multifamily real estate?

If you’re currently in the market for a multifamily home loan, Mid America Mortgage would be happy to help. We offer a selection of investment property loan products to cover 2-4 unit homes. We also have low money down FHA loans that can be used on 2-4 unit properties, as long as the borrower is using one of the units as his/her primary residence.

Call us today at (866) 544-7013, find a retail branch near you,  or complete the Rate Quote Request form on this page to request more information.

*Estimate only. Taxes and insurance not included. Calculated with a 20% down payment, 30 year mortgage, and 3.9% fixed interest rate.

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