The Federal Housing Administration has reduced the annual mortgage insurance premiums charged to homebuyers who obtain an FHA-insured mortgage.

The premium will be reduced from 0.85 percent to 0.55 percent for most homebuyers seeking an FHA-insured mortgage, the agency said in a statement yesterday. The new premium goes into effect on March 20, and the FHA said the reduction would affect an estimated 850,000 borrowers over the coming year, with an average savings of $800 annually.

“For this country to truly succeed, all Americans must have access to opportunity. That means expanding access to wealth-building and home ownership,” HUD Secretary Marcia L. Fudge said in the statement. “Today, we are building on the steps we’ve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future.”

The FHA said the reduced premium supports the Biden-Harris administration’s goals of making homeownership more accessible and affordable, particularly for households of color.

“At a time when budgets are tight and homeownership is out of reach for too many, FHA’s premium reduction will allow more households to access the stability and wealth creation of homeownership, particularly the first-time homebuyers and families of color who rely heavily on affordable FHA-insured mortgages,” Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said in the statement. “For many families, the savings will make the difference in their ability to purchase the home of their choice.”

The Mortgage Bankers Association said in a statement in response to the change that it has encouraged a premium reduction since 2021.

MBA’s President and CEO Bob Broeksmit said in the statement that the Mutual Mortgage Insurance Fund, which insures FHA loans, “is strong, with low delinquencies and a capital reserve ratio several times above the statutory minimum.”

“Ensuring a robust FHA program that protects taxpayers and offers affordable homeownership opportunities for families in underserved communities is important, and we will work with the Biden administration and Congress on policies that have the greatest impact on borrower affordability and sustainability,” Broeksmit said.