The Federal Housing Administration (FHA) reported Wednesday that its Mutual Mortgage Insurance (MMI) Fund maintained a robust capital ratio of 11.47% for fiscal year 2025, holding steady from the previous year.
The announcement, which confirms the fund’s reserves remain more than five times the statutory minimum, prompted leading mortgage trade groups to call for policy rollbacks and premium reductions to aid borrower affordability.
In its annual report to Congress, the FHA disclosed the MMI Fund’s economic net worth grew approximately $16.11 billion to reach $118.87 billion. Agency officials attributed the fund’s continued financial strength to responsible portfolio management and a stable housing market, noting serious delinquency rates have remained consistent with pre-pandemic norms despite a challenging interest rate environment.
The report’s release sparked immediate reaction from the Community Home Lenders of America (CHLA), which argued the FHA’s capitalization levels now justify ending the “life of loan” premium policy.
Instituted in 2013 following the U.S. housing crisis period, the policy requires many FHA borrowers to pay insurance premiums for the entire term of the mortgage, regardless of their equity position.
“In light of today’s report showing continued FHA financial strength, CHLA renews its call for an end to the FHA practice of charging premiums for the life of the loan,” stated Scott Olson, executive director for CHLA, in a press release.
“Borrowers who get an FHA loan down to 78% LTV [loan-to-value ratio] deserve a dividend from FHA’s strong performance — especially since they have paid premiums more than 3 times the actuarial loan risk by that point,” Olson added.
The Mortgage Bankers Association (MBA) echoed the call for relief, focusing on the potential for a broader reduction in annual premiums. MBA President and CEO Bob Broeksmit commented that with the capital reserve well above the 2% statutory minimum, the association would review the report to determine if policy changes are warranted to improve access to homeownership in 2026.
“Any such changes should be calibrated responsibly and informed by a careful evaluation of the program and the economic factors behind the rising serious delinquency rate to ensure the program remains safe, sound and sustainable,” Broeksmit noted in a press release.
The FHA’s report highlights its critical role in the current market, having endorsed more than 876,000 single-family mortgages in fiscal year 2025. Approximately 83% of these endorsements supported first-time homebuyers, underscoring the agency’s function as a primary gateway for entry-level buyers.
The debate over FHA premiums follows last week’s release by the Federal Housing Finance Agency (FHFA) of finalized 2026-2028 housing goals for Fannie Mae and Freddie Mac. On Dec. 23, the FHFA adjusted its single-family low-income refinance goals downward, a move the MBA welcomed as a “constructive step” that better reflects the constraints of the current high interest rate environment.
