The Federal Housing Administration’s Fiscal Year 2025 Annual Report to Congress on the Financial Status of the Mutual Mortgage Insurance Fund shows capital strength is well above statutory requirements, reinforcing FHA’s capacity to expand access to homeownership while still sustaining risk management.
U.S. Department of Housing & Urban Development (HUD) Secretary Scott Turner and Principal Deputy Assistant Secretary Frank Cassidy submitted the report, which is required by statute and presented to Congress.
The report reflects FHA’s stewardship of the MMI Fund’s $1.6 trillion single-family mortgage portfolio and highlights its ongoing role in expanding access to homeownership for first-time and underserved borrowers.
According to the report, as of Sept. 30, the MMI Fund’s Capital Ratio, which is the statutory measure of economic net worth relative to insurance in force, remained at 11.47%. That is unchanged from fiscal year 2024 and more than five times the required minimum of 2%.
FHA said that marks the 11th straight year that the MMI Fund has exceeded the statutory threshold.
Fund’s Net Worth Increased
According to the report, the Fund’s economic net worth increased by roughly $16.11 billion in fiscal year 2025, reaching $188.87 billion.
Total capital resources –including collected premiums, investment income, and asset recoveries — also grew, while net present value cash flows contributed meaningfully to overall strength.
“With the Mutual Mortgage Insurance Fund holding a very high capital reserve of 11.47% – well above the 2% statutory minimum – we will review the report in greater detail to assess whether any policy changes are warranted to improve affordability and access to homeownership in 2026, including a potential reduction in FHA’s annual mortgage insurance premiums,” Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, said in a statement. “Any such changes should be calibrated responsibly and informed by a careful evaluation of the program and the economic factors behind the rising serious delinquency rate to ensure the program remains safe, sound, and sustainable.”
During fiscal year 2025, FHA endorsed insurance for more than 876,000 single-family mortgages, the agency said. Of those mortgages, 83% supported first-time homebuyers. The FHA said it also insured more than 28,000 Home Equity Conversion Mortgages (HECMs) for seniors seeking to age in place.
FHA’s market footprint grew in fiscal year 2025, with its forward mortgage insurance share rising to roughly 19% of relevant originations.
The report also highlighted performance indicators within the insured portfolio. The stand-alone capital ratio for forward mortgages improved slightly, while the stand-alone ratio for the HECM portfolio experienced a slight decline because of cash-flow dynamics.
FHA’s serious delinquency rate remained consistent with pre-pandemic norms in recent years.
Significant Policy Reforms
The 2025 report documents several significant policy reforms FHA implemented during the fiscal year to strengthen loss mitigation outcomes and mitigate risk.
Among those reforms are:
Loss Mitigation Waterfall Redesign: FHA adjusted its loss mitigation protocols to address elevated re-default rates by limiting borrowers to one home retention option per 24-month period and reinforcing capacity assessments, projected to generate cost savings.
Rescission of Outdated Requirements: FHA rescinded numerous obsolete origination and appraisal requirements to reduce lender burden and facilitate streamlined access to insurance.
Enhanced Risk Controls: FHA advanced approaches to identify and address layered risk loans and expanded access to foreclosed property sales to support operational efficiency.
FHA said those measures reflect an emphasis on reducing unnecessary regulatory friction, enhancing risk-based decision-making, and aligning FHA’s operational framework with contemporary housing finance needs.
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