New Lower Fees for FHA Home Buyers

Good 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%.