New Lower Fees for FHA Home Buyers

cost-cutting12Good news for home buyers using the  FHA loan program! The annual mortgage insurance premium (MIP) required on this loan is being cut by half a percent for all new loans starting January 26. The expectation is that this will save the average home buyer $900 per year by reducing their monthly payments.

The MIP is the fee charged to the borrower to compensate for the low down payment. FHA requires only 3.5% down. Because there is little equity in the property, insurance is required to protect the lender in case of default.

This new fee decrease affects the 30-year fixed rate loan (as well as the 25-year and 20-year term). The 15-year loan, which has a lower premium already, remains unchanged.

FHA 30-year Fixed Rate MIP Reduction

Loans less than $625,000, 3.5% down: MIP reduced from 1.35% to 0.80%.

Loans less than $625,000, 5% down: MIP reduced from 1.30% to 0.85%.

Loans at or above $625,000, 3.5% down: MIP reduced from 1.5% to 1.0%.

Loans at or above $625,000, 5% down: MIP reduced from 1.55% to 1.05%.

 

 

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