What changed on April 1
Effective April 1, 2026, HUD reduced the annual Mortgage Insurance Premium to 0.25% across all multifamily programs and all property types. The reduction applies to 223(f) acquisitions and refinances, 221(d)(4) ground-up construction and substantial rehabilitation, and 223(a)(7) streamlined refinances of existing HUD loans.
Before the change, market-rate properties paid 0.60% annually, affordable properties paid 0.45%, and only green-certified or broadly affordable assets qualified for the 0.25% tier. Those tiers are gone. Every borrower now pays the same 0.25%, with no green certification, no energy benchmarking, and no affordability set-aside required to earn it.
What it is worth in dollars
MIP is paid annually on the outstanding loan balance, so the reduction functions exactly like a rate cut. For a market-rate borrower, the move from 0.60% to 0.25% is a 35 basis point reduction in the all-in borrowing cost. On a $30 million 223(f) loan, that is roughly $105,000 in year-one savings, and the savings persist for the life of a loan that can run 35 years.
| Loan Amount | Old Annual MIP (0.60%) | New Annual MIP (0.25%) | Year-One Savings |
|---|---|---|---|
| $15,000,000 | $90,000 | $37,500 | $52,500 |
| $30,000,000 | $180,000 | $75,000 | $105,000 |
| $50,000,000 | $300,000 | $125,000 | $175,000 |
The effect on sizing matters as much as the savings. Because HUD underwrites debt service inclusive of MIP, a 35 basis point reduction in the MIP improves the debt service coverage calculation and can support a larger loan on the same net operating income. Deals that screened just below the coverage floor at the old MIP may now clear it.
Program-by-program impact
223(f) acquisition and refinance. This is where the change lands hardest. The historical knock on HUD permanent debt was that the MIP eroded the rate advantage over agency and life company executions. At 0.25%, that argument is largely gone. A 35-year fully amortizing, non-recourse, assumable loan now carries an all-in cost that competes directly with shorter-term alternatives, while underwriting to current income with no occupancy seasoning requirement.
221(d)(4) construction. Development budgets get the same relief across a construction-plus-permanent term that can reach 40 years after completion. For projects that previously chased green certification primarily to reach the 0.25% MIP tier, that cost and timeline burden is no longer necessary, though many sponsors will still pursue certification for other reasons.
223(a)(7) streamlined refinance. Existing HUD borrowers refinancing within the program receive the new premium as well, which compounds the benefit of resetting to today's structure.
What sponsors should do with this
Owners holding maturing construction loans or floating-rate bridge debt on stabilized or stabilizing assets should re-run their permanent financing comparison. The math that ruled HUD out a year ago is stale. And because HUD loans also allow rate modifications through the Interest Rate Reduction process later in the loan term, locking a long-duration loan today does not mean being stranded if rates fall.