New policy allows cheaper roof coverage, easing pressure on homeowners facing steep insurance increases.
By yourNEWS Media Newsroom
Federal housing officials announced new mortgage-related insurance rules aimed at reducing rising homeowner costs, as insurance premiums across the United States continue to climb sharply.
In a March 18 statement, the Federal Housing Finance Agency said Fannie Mae and Freddie Mac will now allow Actual Cash Value coverage for roofs on single-family homes and condominiums, a change designed to lower insurance costs while maintaining broader property protections.
Under the revised policy, homeowners can insure roofs using Actual Cash Value coverage, which factors in depreciation, while the remainder of the home must still be covered under Replacement Cost Value policies that pay full rebuilding costs without depreciation.
Officials said full Replacement Cost Value coverage for roofs has become increasingly expensive and difficult to obtain in many states, creating barriers for homeowners and buyers. Allowing Actual Cash Value coverage for roofs is intended to address that issue and expand access to insurance.
The update also simplifies insurance deductible requirements and enables more condominium properties to qualify for federally backed mortgages, particularly in markets where insurance costs had pushed buildings out of eligibility.
The agency also eliminated a 2024 policy that required full Replacement Cost Value coverage for all insured components, a move industry groups said had increased costs and limited access to more affordable insurance options.
The National Association of Mutual Insurance Companies said the previous requirement effectively restricted state-regulated insurance products that account for depreciation, raising premiums for homeowners with federally backed mortgages.
The changes come as insurance costs have surged nationwide. Home insurance premiums rose an average of 12 percent last year, reaching approximately $2,948 annually by the end of 2025, according to industry data. Since 2021, average premiums have increased by 46 percent, adding roughly $900 per year for many homeowners.
Several states experienced even sharper increases, with South Carolina, Oklahoma, Nebraska, Iowa, Colorado and Minnesota all seeing annual premium hikes exceeding 20 percent.
Roof-related claims remain a major driver of costs. Data shows roof damage accounted for more than a quarter of residential insurance claim value in 2024, with total repair and replacement costs approaching $31 billion, a nearly 30 percent increase since 2022.
Officials said the policy change is intended to ease monthly housing costs by lowering insurance premiums while maintaining sufficient coverage standards.
FHFA Director William J. Pulte said reducing insurance costs alongside declining mortgage rates could improve affordability for homebuyers.
Mortgage rates have trended downward over the past year. For the week ending March 11, the average rate on a 30-year fixed mortgage stood at 6.11 percent, down from a peak of 7.04 percent earlier in 2025.
Real estate data indicates that lower rates can significantly reduce monthly payments. A homeowner with a $500,000 mortgage who refinances from a higher rate near 7.8 percent to around 6 percent could reduce monthly payments by roughly $500, according to industry estimates.
Officials said the combined impact of lower insurance requirements and declining mortgage rates is expected to improve access to homeownership, particularly for first-time buyers and those in higher-cost insurance markets.
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