Trump's executive order targets mortgage insurance, refinance costs. What it means for borrowers

President Donald Trump has enacted an executive order aimed at lowering mortgage expenses as homeowners face increasing challenges from rising interest rates and inflation. The order, which is named "Decreasing Housing Costs for the American People," instructs federal agencies to take proactive measures, including the cancellation of mortgage insurance for eligible future loans and the expansion of programs designed to make refinancing less expensive.

In a post on X, Bill Pulte, director of the Federal Housing Finance Agency (FHFA), expressed optimism about the order's impact, stating that "millions of Americans will save thousands and thousands of dollars." However, the exact effects on consumers remain uncertain, according to Keith Gumbinger, vice president of the mortgage information website HSH, who noted that more details are needed to assess the order's implications.

Trump's executive order comes just weeks before the midterm elections on November 3, amid heightened public concern about rising costs and housing affordability. This initiative builds on previous actions aimed at limiting the ability of Wall Street firms to purchase single-family homes.

Homeownership has become increasingly difficult for many Americans in recent years. According to the Federal Reserve's latest Survey of Consumer Finances, released in early October, the monthly payment for a 30-year fixed-rate mortgage on a median-priced home constituted approximately 33% of the median family's income in 2025, up from 26% in 2022.

For both current homeowners and prospective buyers, several key aspects of the new executive order are worth noting. Typically, conventional loans, which are not backed by U.S. government programs, require private mortgage insurance (PMI) if the down payment is less than 20% of the home's purchase price. In contrast, all Federal Housing Administration (FHA) loans necessitate mortgage insurance regardless of the down payment amount.

The executive order mandates the FHFA to establish a pilot program that will allow eligible borrowers to have their mortgage insurance canceled "proactively" once their home equity surpasses a specific threshold, according to information from the White House. This initiative will apply to mortgages issued after the pilot program is launched.

Currently, borrowers of conventional loans can typically remove PMI when their loan balance falls below 80% of the home's purchase price or when they achieve 20% equity. According to Fannie Mae, borrowers can request PMI removal once their balance hits 80% of the original value or may have it automatically removed when it reaches 78%.

Seth Appleton, president of the U.S. Mortgage Insurers, a trade organization, commented on the executive order, saying, "We commend the President's focus on lowering costs for future homeowners, and the private mortgage insurance industry is proud to already be delivering on that goal."

The cost of PMI generally ranges from 0.2% to 2% of the loan annually, varying based on factors such as the size of the down payment and the borrower's credit score. For instance, if a buyer purchases a home valued at $600,000 with a 10% down payment and a 30-year fixed-rate mortgage at a 7.3% interest rate, their monthly PMI could amount to $351, as calculated by a private mortgage calculator from Freddie Mac.

Gumbinger noted that most mortgages currently involve PMI due to the trends in home prices and the prevalence of smaller down payments in recent years. In the second quarter of 2026, the median down payment was reported as 13.7% of the home's purchase price, equating to approximately $27,100, according to a September report from Realtor.com.

The executive order also seeks to lower the costs associated with mortgage refinancing by making permanent the FHFA's pilot program that waives the lender's title insurance policy and introduces "cost-friendly alternatives," as stated by the White House.

Gumbinger remarked, "I don't know that it's necessarily a game-changer in terms of the cost of housing, which is dictated by home price and mortgage rates at the moment. But you know, every little bit certainly helps." As of October 23, mortgage interest rates for 30-year fixed-rate mortgages stood at 7.32%, with refinance demand plummeting by 59% compared to the same week the previous year.

Initially set to run until November 2027, the FHFA pilot program was described as "limited in scope," targeting refinances with a loan-to-value ratio below 80% in select states, as explained by former FHFA director Sandra Thompson during a congressional hearing in April 2024. Thompson estimated that consumers could save between $500 and $1,500 in closing costs for loans processed under this pilot program. Making this initiative permanent could provide significant savings for borrowers, as the lender's title insurance policy—often required for new loans and refinances—can be quite expensive, according to Gumbinger. Fees related to title and title insurance typically represent the largest share of mortgage closing costs, as noted in a 2025 report by the Urban Institute.