FHA Lowers Mortgage Insurance To 0.85%

FHA Lowers MIP

Gustan Cho Associates

The United States Department of Housing and Urban Development, HUD, the parent of the Federal Housing Administration, FHA, has issued  Mortgagee Letter 2015-01 which now makes it official where FHA mortgage insurance will be reduced on all FHA case numbers issued on or after January 26, 2015.  The Housing and Urban Development, HUD, is also permitting existing FHA case number with the 1.35% annual mortgage insurance premium to be canceled and new FHA case numbers to be issued so FHA home buyers and FHA refinance mortgage loan borrowers can take advantage of the lower 0.85% FHA annual mortgage insurance premium as long as they were ordered at least 30 days from the date of this mortgagee letter. This lowering of the FHA Annual Mortgage Insurance Premium from 1.35% to 0.85 will be a huge benefit for FHA mortgage loan borrowers and those with higher FHA annual mortgage insurance premiums can now refinance their current FHA mortgage loans and get the reduction of the FHA annual mortgage insurance premium.

Benefits For Lower Annual FHA Mortgage Insurance Premiums

FHA lowers mortgage insurance to 0.85% from the current 1.35% is a HUGE benefit and savings for FHA insured mortgage loan borrowers.  This huge lowering of FHA annual mortgage insurance premium will benefit home buyers, refinance mortgage loan borrowers, and FHA streamline refinance mortgage loan borrowers.  For FHA insured mortgage loans with mortgage terms that are greater than 15 years, the FHA insured mortgage loan borrower will need to pay an annual FHA mortgage insurance premium of 0.85% from the current 1.35% FHA mortgage insurance premium.  FHA mortgage loan borrowers with loan to values of 95% LTV or lower, the FHA annual mortgage insurance premium will be set at 0.80%.

For FHA insured mortgage loan borrowers who have 15 year fixed rate FHA loans, there will be no changes to the FHA mortgage insurance premium and will remain at 0.70% for loan to values of greater than 90% LTV and 0.45% annual FHA mortgage insurance premium for those with 90% or lower loan to values..

Your monthly mortgage insurance premium for FHA is calculated by taking the FHA mortgage loan balance, multiplying the 0.85% premium factor to the mortgage balance, and dividing it by 12 months.

FHA Reduction In Annual Mortgage Insurance Premium: More Buying Power

With the lowering of the FHA annual mortgage insurance to 0.85% from the current 1.35%, this means that the home buyer has much more buying power because the housing expenses will be greatly reduced.  Those home buyers who have higher debt to income ratios will greatly benefit from the reduction of the FHA annual mortgage insurance premium.

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