President Obama announced last week that the Federal Housing Administration (FHA) will cut fees on the mortgages it insures to help make buying a home less expensive.

The annual premium charged on FHA loans have been trimmed to 85 basis points from the 135 basis points levie. The result for home buyers will be similar to seeing interest rates cut by half a percentage point.  That half a percentage point drop translates into about a $1,000 annual savings for a borrower with a $200,000 loan. FHA-insured borrowers also have to pay an upfront premium, and that stays the same.

The new prices are expected to go into effect relatively soon so buyers can start taking advantage of the lower fee.

The FHA insures loans made to borrowers who make down payments that are as small as 3.5% of the value of a home. That makes it popular among first-time home buyers and others with little wealth for a down payment.