FHA Mortgage Insurance Set to Increase

As announced earlier this year, FHA has now made official its plan to increase mortgage insurance premiums for case numbers after October 4, 2010.  For loans with a loan-to-value (LTV) of over 95% (which is most first time buyers, in my experience), the monthly fee increases from .55 bps to a whopping .90 bps.

How does this translate for the typical borrower with FHA’s minimum 3.5% down payment?  On a $275,000 loan, the monthly payment is about to become $70 higher per month! This makes payments less affordable for many first time buyers, and adds ‘insult to injury’ following the expiration of the first time home buyer credit.

If you’re on the fence about making an offer on a home, I’d suggest pulling the trigger before the end of September so that you can get the loan’s case number assigned prior to this hefty increase in fees.

If you’re ready to start your Northern Virginia or DC area home search, please contact us – we’d love to help!

Learn More: Attend a free first time home buyer class

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One thought on “FHA Mortgage Insurance Set to Increase

  1. Hi Katie, great site…packed full of good info for your clients. I have already seen an impact of the higher FHA monthly UFMIP for two borrowers. One client buying a home had to re-adjust what homes he is looking at because his DTI is impacted by the higher MI rate and another borrower was planning on refinance to take advantage of the lower rates but the new .90% MIP rate is greatly reducing his his benefit by increasing his payment!

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