The Federal Housing Administration (FHA) has announced that effective October 1, it is reducing the FHA multifamily mortgage insurance premiums (MIP) for all multifamily programs to 25 basis points. Multifamily MIPs generally range from 25 basis points up to 95 basis points, unless a project was deemed part of a special program.
Through a notice in the Federal Register, the U.S. Department of Housing & Urban Development (HUD) made these multifamily MIP rate changes in response to current market conditions, where a sharp rise in construction costs and interest rates has made housing less affordable. By lowering MIPs, HUD’s goal is to reduce multifamily financing costs, while expanding the
“These across-the-board MIP reductions are necessitated by a sharp rise in construction costs and mortgage interest rates since 2021,” notes HUD in Docket No. FR–6522–N–02 in the Federal Register. “Market rate property MIPs were explicitly unchanged in 2016 and remain cost prohibitive. As explained in the June 26, 2025, notice proposing this revision, HUD data shows that from March 2024 to March 2025, only 4% of Section 221(d)(4) and 223(f) loan closings were for market rate properties without green or affordable incentive qualification, suggesting severe underutilization due to high cost. Through this notice, HUD expands the MIP cost-saving benefits to all property types, to immediately lower financing costs and stimulate rental housing development.”
The National Association of Home Builders (NAHB) reports that price growth for residential building materials rose for the fourth straight month in August 2025, reaching its highest level since January 2023. Across domestic inputs goods and services into residential construction, service prices decreased in August, while goods prices slightly advanced.
On January 20, 2025, President Trump signed a presidential memorandum titled, “Delivering Emergency Price Relief for American Families and Defeating the Cost-Of-Living Crisis.” The memorandum ordered the heads of all executive departments and agencies to deliver emergency price relief to the American people, including by pursuing appropriate actions to lower the cost of housing and expand housing supply.
