NAHB National Association of Home Builders : HUD Announces Cuts to FHA Multifamily Insurance Rates

HUD Secretary Julian Castro announced today that, effective April 1, the Federal Housing Administration (FHA) will cut its multifamily insurance rates in an effort to expand the production of affordable multifamily housing.

'By reducing our rates, this administration is taking a significant step to encourage the preservation and development of affordable housing and energy efficient housing in communities large and small,' Castro said.

In a HUD press release, the agency said the 'multifamily insurance rate reductions will spur the rehabilitation of an additional 12,000 units of affordable housing per year nationally.'

Under FHA's new annual multifamily insurance rates, the agency is lowering annual rates to 25 basis points, a reduction of 20 to 25 basis points from current rates, for 'broadly affordable' housing in which 90% of the units are under Section 8 contracts and/or covered by the Low Income Housing Tax Credit (LIHTC).

For affordable mixed-income properties that HUD characterizes as set-aside units based on partial LIHTC, partial Section 8, inclusionary zoning or other local affordability requirements, FHA is lowering annual rates to 35 basis points, a reduction of 10 to 35 basis points from current rates.

For energy-efficient multifamily properties, FHA is lowering annual rates to 25 basis points, a reduction of 20 to 45 basis points.

Multifamily insurance rates for market-rate properties that are not energy efficient will remain unchanged.

For more information, email Michelle Kitchen at NAHB or call her at 800-368-5242 x8352.