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.