The Obama Administration announced on Tuesday it will provide relief for service members and veterans by reducing the interest rate on their loans and lower fees for Federal Housing Administration borrowers looking to refinance.

Borrowers who participate in FHA’s streamline refinance program will see the fees charged reduce substantially according to the White House.

Currently, FHA charges an up-front mortgage insurance premium of 1% of the borrower’s loan balance and an additional 1.15% of the balance per year. FHA is reducing the up-front premium to .01% for streamlined refinancings of loans originated prior to June 1, 2009 and cutting the annual fee for these refinancings in half, to .55%.

These reductions could save a borrower about $1,000 per year and help an estimated 2-3 million FHA borrowers.

“While it is always difficult to estimate participation in these programs, this will result in significant monthly savings for hundreds of thousands of families,” said the White House in a statement.

According to figures provided by the White House, a typical borrower with $175,000 outstanding on their mortgage who refinances into a loan at 4% under the new program could reduce their monthly payments by $100 per month.

Fore more information on the program, see here.

Update: RMD has confirmed that the changes do not apply to FHA’s reverse mortgage program, the Home Equity Conversion Mortgage (HECM).