This month’s HUD Insights starts with major news that impacts your projects: HUD has lowered the mortgage insurance premium for all multifamily loans. These are the latest policy updates from Washington, D.C., that are shaping the future of multifamily housing.

• 1. HUD Sets Single 0.25% MIP for All Multifamily Programs
• 2. Full Impact of Fed Rate Cut Yet to Be Seen
• 3. Rule Change Eases Compensation Pressures on Multifamily Developers
• 4. HUD Sends Final Disparate Impact Rule for OMB Review
• 5. Current Admin Signals Housing Priorities Through the Rest of the Year

1. HUD Sets Single 0.25% MIP for All Multifamily Programs

The story: The Department of Housing and Urban Development (HUD) has finalized a rule that simplifies and reduces financing costs for FHA Multifamily Insurance Programs. Effective Oct. 1, all new or amended applications will carry a uniform 0.25% mortgage insurance premium (MIP).

• The previous tiered categories—“Green & Energy Efficient,” “Affordable,” and “Broadly Affordable”—are eliminated.
• The change applies to applications submitted or amended on or after Oct. 1, provided the loan has not been initially endorsed.
• Loans already endorsed will not be affected.

“This is a significant step in streamlining FHA multifamily financing. A flat 0.25% MIP makes modeling easier and reduces costs for developers and operators.”
– Megan Booth, Vice President of Commercial Real Estate Finance Policy, Mortgage Bankers Association

The follow-up: Borrowers should revisit financial models to reflect the new premium and confirm whether any green certifications or reporting requirements once tied to MIP reductions are still needed. The change is aligned with broader federal priorities to expand housing supply and reduce cost pressures.

The bottom line: A single, lower MIP creates cost savings and simplifies underwriting for multifamily borrowers, making project feasibility stronger in today’s high-cost environment.

2. Full Impact of Fed Rate Cut Yet to Be Seen

The story: Financing costs for HUD 221(d)(4) and 223(f) loans saw a significant drop after the Federal Reserve lowered its benchmark interest rate by 25 basis points earlier this month. How low will rates go? That’s still an open question: Housing analysts are watching movement in the 10-year Treasury, which indicates longer-term trends.

• The biggest beneficiaries may be borrowers who want to refinance or make energy efficient upgrades.
• This is the first time the Fed has cut its benchmark rate this year.
• Caution: Underlying the Fed’s move is a faltering U.S. economy, which is showing weaker job creation and inflation that exceeds the Fed’s 2% target rate.

“The fact that the Federal Reserve is taking its time, it’s being balanced and measured in how it adjusts its rates—I think that gives confidence to investors all around the world.”
– David Kelly, chief global strategist at JPMorgan Asset Management

The follow-up: Interest rates may get additional downward pressure this year, as the Fed signaled a potential for two more rate cuts by the end of 2025.

The bottom line: The lending environment is becoming particularly favorable for HUD multifamily borrowers. Just keep an eye out for indications of broader economic performance.

3. Rule Change Eases Compensation Pressures on Multifamily Developers

The story: The Department of Labor (DOL) has raised the threshold at which split wages are determined under the Davis-Bacon Act for federally funded multifamily projects. This helps manage costs for developers, who also are grappling with increasing prices for construction materials.

• The new threshold has increased from $2.5 million to $3.3 million, or 20% of project costs.
• This lowers per-unit delivery costs for federally insured housing units, which is meant to encourage greater construction.
• A housing coalition, including the Mortgage Bankers Association (MBA), wrote a letter to DOL in May calling for the Davis-Bacon Act to be rescinded and revised.
• The coalition said the previous rule increased development costs for affordable housing by 10% to 20%.

“The cost of labor has dogged construction projects for some time, and this change gives multifamily developers meaningful financial relief and a clearer path forward for new starts. But there’s more that can be done.”
– MBA’s Megan Booth

The follow-up: Booth says MBA continues to meet with DOL to discuss further changes to the Davis-Bacon Act to address the timing of the wage determination, the definition of a residential structure, and the improper use of split wages.

The bottom line: Multifamily developers can forecast lower expenses for contractor compensation, leaving more room for project improvements.

4. HUD Sends Final Disparate Impact Rule for OMB Review

The story: The Office of Management and Budget (OMB) has posted a notice saying that it is reviewing a “final rule” submitted by HUD to change the standard of disparate impact under the Fair Housing Act. The content of the rule change has not been published to the Federal Register, but housing advocates expect it to take the teeth out of disparate impact liability.

• Disparate impact is a method of proving discrimination based on outcomes rather than intent.
• The OMB’s notice comes after an executive order issued in April discouraged the use of disparate impact to assess housing discrimination
• A coalition of major housing and consumer rights groups sent a letter to HUD in early September, asking to preserve the disparate impact rule.

“It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
– Executive order issued in April

The follow-up: The National Low-Income Housing Coalition says it expects the final disparate impact rule to mirror a 2020 rule under the first Trump administration that took the teeth out of disparate impact.

The bottom line: Housing providers are still responsible for maintaining equitable business practices under fair housing law.

5. Current Admin Signals Housing Priorities Through the Rest of the Year

The story: The OMB recently republished its spring agenda for HUD and FHA, indicating the Trump administration’s housing priorities through the rest of the year. Topline items on the docket include:

• Rescission of the Federal Flood Risk Management Standard (FFRMS) for multifamily properties, which was delayed in July after Texas storms
• Update and streamline HUD’s environmental requirements
• Changes to HUD’s disparate impact rule
• Flexible financing for HUD 232 healthcare properties

The follow-up: Some of these priorities, such as the FFRMS rescission, have already been greenlit and are simply waiting to be implemented at the appropriate time. The remainder of the Trump administration’s housing agenda likely faces few hurdles to enactment.

The bottom line: Look to see robust movement around housing policy on Capitol Hill through the rest of the year.