Biden White House announces plan to save homebuyers and owners money
Move from the Biden White House that could have an impact on the housing market here in the United States. The administration has just announced a program offering relief to eligible home buyers and home owners from rising mortgage insurance costs. The program is expected to benefit 850,000 families this year alone with average savings of $800 per year. And in just hours, Vice President Kamala Harris and Department of Housing and Urban Development Secretary Marcia Fudge will travel to Maryland to share more about this new program. And before that, Secretary Fudge joins us now with the exclusive details. It's great to have you on the show this morning. This program sounds really promising.
If you could explain more, Madam Secretary, on how this will help future homeowners and current homeowners. I'm happy to. Thank you so much for having me. What do we know is that as prices have continued to rise over the last few years, that fewer and fewer people are buying homes. And so what we thought, the President and Vice President said, look, everybody try to find a way that we can relieve some of the financial burden that people are facing every day. So it came to us that persons who are not able to put down at least 20% on a mortgage are charged what we call a mortgage insurance premium. And that premium can go from anywhere from $100 a month to $1,500 a month.
It depends based upon the cost of the home. So that may be just that enough to keep them from purchasing a home. And we said, well, why are we doing this? Because we already have in reserves for losses five times what Congress has asked us to hold. So we said, let's get it back to the people. Let's find a way to help new homeowners, new home buyers, people of color, first generation homeowners, get a chance at the American dream. And that's what we're doing today. We're saying we're going to reduce that amount by.
I'm curious, you're going to reduce that amount by because some of the numbers I'm looking at just, I still think a lot of people will be locked out of the process. Is it going to be enough to help people get into homes? Oh, absolutely. When you consider the fact that in times of difficulty, like we are facing now economically, most people turn to the federal government. FHA underwrites the mortgages of almost, I mean, new mortgages, 80% of our new mortgages are first time home buyers. We have lots of programs. This is just one in addition to what we're already doing. And we believe that it is going to encourage people to purchase new homes.
And how will it do that, especially given the interest rates that people are facing right now and the prices of a home or even getting an apartment, buying a small home, it seems impossible for some people given the multiple challenges that they are facing. What exactly will they see with this new program that will help them be able to make that move? I would suggest you two things. One is that rent today is so high that it is probably less expensive to purchase than it is to rent because most people who can pay their rent clearly can pay a mortgage. What we are trying to do is on the front end assist them with getting into a new mortgage. And first time home buyers, especially need help. So if we can save them anywhere from $800 a year up to $1,500 a year, that is significant because the mortgages are so small for first time home buyers. So we know that if we reduce this by 30% points and reduce it to a place that people can afford it, it makes a world of difference for those who are just barely getting by.
Secretary Fudge, good morning. It's great to have you back with us. I'm just looking at the home ownership rates over the last couple of years and it looks like they've gone up across racial demographic groups and actually more among black and Hispanic homeowners than even among white homeowners. To what do you attribute that, that more people lately just in the last few years are able to buy homes? Obviously the interest rates were low for a long time there and have gone up since, but what else is going on there? We are making sure that people who have student debt no longer are treated unfairly. It was our practice at FHA in underwriting that if you had student loan debt, it was weighted much higher than any other kind. And who has student loan debt? Black people, brown people, poor people. We also, we made that to a point where we have made it equal and neutralized it for every single person.
We've also said that for people who had been deemed uncredit worthy, which many of them are first-time buyers, they are people of color or they are poor, they'll say you have no credit because you don't have any real credit history. So we're now in our underwriting saying if you have a positive rental history, that for us is good credit. And so we make them credit worthy. We as well are assisting with a number of other things, but those are the two big ones. And the president has also requested some hundred billion, hundred million dollars in down payment assistance. Most people can afford to pay their monthly mortgage. They don't have the upfront resources.
And so we are working with buyers on that. So a number of things have happened that have encouraged people of color and new home buyers to get into the market. But lastly and most importantly, we have more than doubled our housing counseling. So people can sit down and talk to people and understand, yes, you can buy a home. Yes, we can help you do that. And I think just the knowledge of the things that are available to them have made it so that they are interested and they are seeking advice. And most of them do in fact qualify.
HUD Secretary Marsha Fudge, thank you so much for being on the show this morning. We appreciate it.
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