FHA Announces HECM Saver, New Low Cost Reverse Mortgage

The Department of Housing and Urban Development (HUD) officially released a new low cost reverse mortgage product for consumers on Tuesday.

Designed to address one of the biggest complaints of reverse mortgages, the HECM Saver offers borrowers less money at a lower cost.

“FHA designed HECM Saver as a second initial mortgage insurance premium (MIP) option for the purpose of lowering upfront loan closing costs, for mortgagors who want to borrow a smaller amount than what would be available with a HECM Standard,” said David Stevens, Assistant Secretary for HUD.

According to HUD, the HECM Saver has a 0.01% upfront mortgage insurance premium and 1.25% annual MIP.  Much lower than the 2% upfront MIP and 1.25% annual MIP charged to HECM Standard borrowers.

The product is available for all transaction types and both a fixed rate and LIBOR or CMT based loan.  To view the principal limit factors, see here.

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