A new US housing order directs the Federal Housing Finance Agency (FHFA) to test automatic mortgage-insurance cancellations on some newly issued loans and make a pilot aimed at lowering refinance costs a long-term program. The changes could reduce monthly premiums or closing costs for some borrowers, but eligibility rules and potential savings have yet to be set. Home prices and mortgage rates remain the main drivers of housing affordability.
FHFA Director Bill Pulte said on social media that millions of Americans would save thousands of dollars. Keith Gumbinger, vice president of mortgage research firm HSH, said it is too early to assess the benefit to consumers without details of how the policies will work.
FHFA to test automatic insurance cancellation
Borrowers with conventional mortgages who put down less than 20% typically pay for private mortgage insurance (PMI). Federal Housing Administration (FHA) loans generally require mortgage insurance for all borrowers. Under the new order, FHFA is to design a pilot that would automatically cancel insurance on eligible loans once borrowers reach a specified level of home equity. The pilot would apply to loans issued after it begins, but the equity threshold and other operating details have not been announced.
Under current rules, Fannie Mae says conventional-loan borrowers can generally request PMI cancellation once their loan balance falls below 80% of the home’s purchase price or their equity reaches 20%. Servicers may cancel coverage automatically when the balance reaches 78% of the home’s original value. The proposed pilot could remove the need for eligible borrowers to request cancellation themselves, though its scope and procedures remain unclear.
Annual PMI premiums typically range from about 0.2% to 2% of the loan amount, depending on factors including the down payment, credit score and loan size. Freddie Mac’s private mortgage calculator estimates that a buyer putting 10% down on a $600,000 home with a 30-year fixed-rate mortgage at 7.3% would pay about $351 a month for mortgage insurance.
Gumbinger said rising home prices and relatively small down payments have left many borrowers paying PMI. Realtor.com reported that the median US homebuyer down payment in the second quarter of 2026 was 13.7% of the purchase price, or $27,100. Seth Appleton, president of the US Mortgage Insurance Companies trade group, said the industry supports efforts to lower costs for future homebuyers and noted that private mortgage insurers already provide related services.
Refinance cost pilot to become a long-term program
The order also directs FHFA to make a refinance pilot a long-term program. It allows lenders to use a “lower-cost alternative” to lender’s title insurance policies, with the aim of reducing closing costs on refinanced mortgages. Title-related fees and insurance are typically among the largest components of mortgage closing costs, so changes could benefit some borrowers.
The pilot was originally scheduled to run through November 2027 and had limited reach. At a congressional hearing in April 2024, then-FHFA Director Sandra Thompson said it applied only to refinances in a small number of states where the loan-to-value ratio was below 80%. She estimated that loans included in the pilot could save consumers $500 to $1,500 in closing costs. Whether the long-term program will expand eligibility, and how much borrowers will ultimately save, depends on rules still to come.
Freddie Mac put the average 30-year fixed mortgage rate at 7.32% as of October 23, 2026. Refinance application demand in mid-October was down 59% from a year earlier. Gumbinger said lower title-insurance and related fees could reduce borrower expenses, but home prices and mortgage rates remain the larger factors shaping housing costs. Borrowers are still waiting for FHFA to set the pilot’s eligibility thresholds, loan coverage and implementation timeline.