Trump's housing affordability order targets costs that hundreds of thousands of homeowners pay each year

President Trump signed an executive order designed to address housing affordability. Among his targets is mortgage insurance.

The executive order signed Thursday directs the Federal Housing Finance Agency — which oversees mortgage giants Fannie Mae and Freddie Mac — to create a pilot program that would automatically cancel borrowers' mortgage insurance premiums when they have sufficient equity in their homes.

Hundreds of thousands of borrowers use private mortgage insurance each year to qualify for conventional mortgages when they put less than 20% down on their homes. Currently, borrowers can contact their lender and have the insurance canceled when their equity position reaches 20%, and lenders must automatically drop the insurance once the owner has 22% equity, meaning the pilot would streamline existing processes.

PMI premium amounts vary depending on factors like credit score and down payment size, but Freddie Mac estimates them at $30 to $70 a month per $100,000 borrowed. Some mortgage brokers have reported that they're frequently lower, and U.S. Mortgage Insurers, a trade group for the industry, says premiums are down 25% since 2017.

In recent years, as homes have become more expensive, use of PMI has been on the rise. As of 2024, 36% of conventional mortgage borrowers paid PMI, up from 25.4% in 2016, according to Urban Institute data.

The executive order also aims to address affordability by creating a task force on manufactured housing construction innovation, expanding a pilot that waives title insurance for certain refinancings, and directing officials to lower rates on the small number of home loans made directly by the Department of Veterans Affairs and Department of Agriculture.

Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.