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FHA Cuts Annual MIP!

January 9, 2017 — Leave a comment

fha updateFHA announced this morning that it is lowering the annual premium 25 bps.  It is effective for loans with a closing or disbursement date on or after January 27th, 2017.  By making the change effective for loans closed instead of case numbers assigned, it eliminates a lot of the confusion caused in 2015 when premiums were last reduced.

How does this translate into real dollars?

In most cases 3.5% down payment on a 30yr fixed loan (less than $625,000) the current annual MIP equals 85 basis points of the loan amount (Loan Amount X 0.85%).  The new rate equals 60 basis points (Loan Amount X 0.60%).

For example – using the perimeters above, a $200,000 loan currently yields monthly mortgage insurance payment of $141.67.  Under the new rate the monthly mortgage insurance payment drops to $100.  Generating ~$500 p/yr in savings!

This is HUGE!

Here is a link to the press release:  https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2017/HUDNo_17-003

Here is a link to the Mortgagee Letter:  https://portal.hud.gov/hudportal/documents/huddoc?id=17-01ml.pdf

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Newspaper  good newsIn the first Mortgagee Letter of the year FHA makes a HUGE change by reducing its annual mortgage insurance by 50 basis points across the board.  The new rate will be 85 basis points (for loans with less than 5% down payment).

Example – $200,000 mortgage with 3.5% down payment

Previous FHA monthly mortgage insurance at 135 basis points = $225 p/mo

New FHA monthly mortgage insurance at 85 basis points = $142 p/mo

See all the details here in Mortgagee Letter 2015-01

FHA cuts MI