FHA Lowers Mortgage Insurance Premium
Great news for homebuyers considering an FHA home loan or FHA refinance! The popular mortgage program is getting even better. The Department of Housing & Urban Development announced this morning that the FHA will be decreasing their annual mortgage insurance premium by a quarter of a percent. The upfront guarantee fee will remain the same.
Effective for new mortgages closing on or after January 27th, the annual fee—paid monthly—will decrease from .85% to .60%. This news comes only four months after the USDA decision to lower their own upfront and annual fees on rural development loans.
New FHA MIP Savings Example
Now, unless you spend your spare time studying loan program guidelines, that might sound like gibberish—so let’s do some math to demonstrate the savings. On a $200,000 home purchase, the monthly mortgage insurance premium would decrease from $142 to $100. That is a savings of $42 per month, over $500 per year!
The FHA made this decision following four straight years of growth and $44 billion dollars of value gained since 2012. They aim to protect the insurance fund while also offsetting the cost of increased mortgage interest rates.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, its time for FHA to pass along some modest savings to working families” -HUD Secretary, Julian Castro
Requirements for an FHA loan
You might be thinking, that’s great, but how do I know if an FHA loan is the right fit for me? I’m glad you asked! Qualifying for an FHA loan is relatively simple and provides many benefits, including but not limited to:
- Minimum credit score of 580
- Down Payment as low as 3.5%
- No early payoff penalties
- Allows seller-paid closing costs
FHA announcement: Read FHA Mortgagee
Have a specific scenario you’d like to run past us? Give us a call to speak with one of our licensed loan officers, or check out our FHA Mortgage Calculator. We would love to recommend the best loan program for you and your situation.
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Call Riverbank Finance today at 1-800-555-2098