First-time homebuyers will pay less in up-front premiums for the government's FHA mortgage insurance, President Clinton said Thursday.
Starting Sept. 1, first-time FHA borrowers will pay 1.75% of the loan's face value, down from 2%.
A homeowner with an average FHA-insured mortgage of $85,000 will save $200 on closing costs. The savings will add 50,000 families to the pool of Americans who can afford to buy a home, according to the Department of Housing and Urban Development, which administers the FHA program.
Prospective homebuyers must complete a 16-hour course on how to budget, manage debt, and maintain their homes to qualify for the premium reduction.
This is the third FHA premium cut since 1993, as the Clinton administration attempts to boost the homeownership rate to a record 67.5% by 2000. The administration said closing costs are $1,200 lower on the average FHA home loan because of these and other changes.