FHA to raise monthly mortgage insurance premiums… Again.

HUD has announced that it will once again raise the FHA monthly mortgage insurance premium. As you may recall it increased last Fall from 0.55% annually of the loan amount to 0.90% annually of the loan amount for loans equal to or greater than 95% loan-to-value. The minimum down payment for FHA loans is 3.5% leaving an LTV of 96.5, so most FHA loans originated fall into this 0.90% category.

For all loans originated on or after April 18, 2011 the new FHA mortgage insurance rate will be 1.15%.

FHA monthly mortgage insurance premiums are figured like this:

Loan balance X MI rate = Annual amount / 12 months = monthly MI payment.


$200,000 loan balance X 0.90% = $1,800 annually / 12 months = $150.00 a month MI payment.

With the increase the equation will look like this:

$200,000 X 1.15% = $2,300 / 12 = $191.67 a month mortgage insurance payment.

What this will effectively do is reduce the amount of loan you will qualify for by about $10,000 or so.

So, if you’re looking at buying a new home or refinancing, be sure to get your loan approval done before April 18th and save yourself some money.

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