The Federal Housing Finance Agency (FHFA) has instituted new policies for Fannie Mae and Freddie Mac mortgages that are designed to help to lower home insurance bills.
Among the changes, condo buildings can now use the cheaper actual cash value (ACV) roof coverage for single-family homes and condos, simplifying the “maximum per-unit deductible” rule. This will help many condo buildings that were priced out of the mortgage market to qualify again. Full replacement roof coverage has become ridiculously expensive and hard to find in many states.
The rest of the house still gets full replacement cost value (RCV) protection – meaning it will be rebuilt brand-new if disaster hits.
Also, the agencies are scrapping a clarification from 2024 that would have slowed down insurance claims and driven up costs.
“Lower insurance costs and mortgage rates shrink the monthly payment of a new mortgage, giving new homebuyers confidence that they can afford the American dream,” FHFA Director William Pulte said.
These updates are expected to translate to lower monthly payments, more first-time buyers able to close on homes, and rural communities keeping access to insurance they were at risk of losing. Ultimately, the changes are designed to provide homeowners with strong protection at lower prices.