How the Mortgage Insurance Freedom Act Supports Latino Homebuyers

A blog empowering Hispanic homeownership through advocacy and policy.

By Elizabeth Nimmons
November 20, 2025

FHA loans are one of the most important paths to homeownership for many aspiring first-time homebuyers, especially Latino families. Unfortunately, the cost of mortgage insurance (MI) continues to place a significant burden on these borrowers, slowing the building of equity and adding thousands of dollars in lifetime costs. There is hope, however, and the Mortgage Insurance Freedom Act, recently reintroduced by Rep. Gregory Meeks (D-NY) and Rep. Pete Sessions (R-TX), takes a meaningful step toward easing that burden.

Understanding the Issue: How Mortgage Insurance Affects Latino Homebuyers

As we explored in a prior Housing Hub post, Easing the Burden: The Case for Reducing FHA Mortgage Insurance Costs, FHA borrowers must pay both an upfront mortgage insurance premium (MIP) and an annual premium that, for many, lasts for the life of the loan.

This differs significantly from the private mortgage insurance (PMI) used in conventional lending. In the conventional market, PMI is canceled automatically once the borrower reaches approximately 78% loan-to-value (LTV). For FHA borrowers, however, many continue paying MI every month, even after reaching that same level of equity.

This policy has real equity and affordability implications:

• Latino borrowers rely on FHA at high rates, often due to the lower down payments required on these loans.
• Lifetime MI requirements add thousands of dollars over the life of the loan, reducing monthly affordability.
• Equity builds more slowly, which limits household wealth creation, especially in the early years of homeownership.
• The FHA’s Mutual Mortgage Insurance Fund is financially strong: as of September, 2024, the MMI Fund’s capital ratio was nearly six times the required minimum. This means the lifetime MI requirement is no longer necessary to protect the fund

Modernizing FHA’s MI rules is one of the most impactful ways to help Latino families achieve sustainable homeownership and build wealth more quickly.

In our prior post, NAHREP made the case for reducing FHA mortgage insurance costs by both lowering the upfront mortgage insurance premium and eliminating the lifetime mortgage insurance premium requirement. Recently reintroduced bipartisan legislation aims to do the latter.

What the Mortgage Insurance Freedom Act Does

The Mortgage Insurance Freedom Act (H.R. 5508) specifically addresses the unfairness of lifetime FHA mortgage insurance. Key provisions of the bill include:

• Ends annual MIP once the loan reaches 78% LTV: The bill directs FHA to stop collecting the annual mortgage insurance premium when the borrower’s remaining principal balance reaches 78% of the original home value or purchase price, aligning with the conventional PMI standard.
• Protects the Mutual Mortgage Insurance Fund: If the MMI Fund’s capital ratio falls below the statutory 2% minimum, the cancellation requirement would pause for affected mortgages until the ratio is restored.
• Requires rulemaking and consumer education: FHA must issue implementing regulations within 180 days and conduct outreach to ensure borrowers understand the change.
• Applies to FHA loans insured after enactment: While not retroactive, the bill sets a critical new standard for future FHA borrowers.

By aligning FHA more closely with the private market, the bill reduces long-term borrowing costs, strengthens equity-building, and removes an unnecessary financial penalty on the lower-wealth and first-time homebuyer households that FHA is designed to serve.

Why It Matters and What You Can Do

The rising cost of home construction is not just a builder’s problem; it is a significant barrier to homeownership. For Latino families working towards the American dream of becoming homeowners, every increase in construction costs can mean the difference between buying and being priced out. Addressing this challenge requires comprehensive policy work, ranging from zoning modernization to tariff reform, that brings down costs and increases the affordability and accessibility of homeownership.

NAHREP members and other real estate professionals have a vital role to play in advocating for these solutions by supporting reforms that lower construction costs and expand housing supply, educating buyers on how policy decisions impact affordability, and working with local governments and developers to advocate for zoning and land use reforms.

How NAHREP Members Can Support the Mortgage Insurance Freedom Act Now

Real estate professionals are among the most influential advocates in housing policy. Sharing your clients’ on-the-ground experience with MI burdens can make a real difference as Congress considers this bill.

1. Contact Your Members of Congress: NAHREP has partnered with our friends at the Broker Action Coalition (BAC) to support a campaign making it easy to contact your elected officials with one click. Your message will help lawmakers understand how lifetime MIP affects your clients and how this bill can improve affordability and homeownership success.

Mortgage insurance reform is more than a technical policy change; it is a meaningful step toward closing the Latino wealth gap, lowering the cost of homeownership, and modernizing federal housing programs. NAHREP members play a pivotal role in shaping this conversation. By raising awareness, sharing your expertise, and participating in the BAC campaign, you can help advance a policy that would deliver immediate, tangible financial relief to future Latino homebuyers.