Effective on all new FHA loans setup on or after April 18, 2011 the FHA monthly Mortgage Insurance Premium (MIP) will be increasing by 25 basis points. This means that for most FHA transactions the monthly MIP will be calculated using 1.15% of the base loan amount (currently the monthly MIP factor for these transactions is .90%). For transactions with a 30 year term and down payments of 5% or more the monthly MIP will be calculated using 1.10% of the base loan amount (currently the monthly MIP for these transactions is .85%).

Example of Monthly Mortgage Insurance Premium Increase (MIP)

(transactions with a 30 Year term product and less than 5% down payment)

Base Loan Amount

$150,000

$250,000

$350,000

Current Monthly MIP Payment (0.90%)* 

$113

$188

$263

New Monthly MIP Payment (1.15%)**

$144

$240

$335

Increase in Monthly Payment

$31                      ($372 per year)

$52                      ($624 per year)

$72                      ($864 per year)

*For case numbers assigned on/before April 17, 2011

 

**For case numbers assigned on/after April 18, 2011

 

This is the second MIP rate increase made by the Department of Housing and Urban Development (HUD) in the last year. The last coming in October 2010 when on most FHA transactions the MIP increased from .55% to .9% and the Up Front Mortgage Insurance Premium (UFMIP) lowered from 2.25% to 1%. Both of these changes are an effort for Ginnie Mae, the agency that insures FHA loans, to stay solvent and avoid issues faced by Fannie Mae and Freddie Mac.

If you or someone you know plans on obtaining a new FHA loan it is important that they/you understand these changes to possibly save thousands of dollars over the life of the loan. Please don’t hesitate to contact us with any questions at 425-413-6428 or info@HappyHomeTeam.com