FHA Mortgage Insurance Premium Update

FHA Mortgage Insurance Premium Update

Recently the President signed into public law 111-229, which provides the Secretary of Housing and Urban Development (HUD) with additional flexibility regarding the amount of the premiums charged for Federal Housing Administration ( FHA) single family mortgage insurance programs. This new law permits HUD to increase the annual mortgage insurance premium charged. The insurance premium is based on loan to value (LTV).

Loan to Value (LTV) Old (MIP) New (MIP)
< or = 95% 0.5% 1.5%
> 95% 0.55% 1.55%

Although the law allows HUD to increase to these new amounts, they have chosen not to do so at this time. HUD has decided to raise the annual insurance premium while lowering the upfront premium. FHA states that it is in a position to meet the demands of the market place while retuning the Mutual Mortgage Insurance (MMI) fund to its congressionally mandated levels without disturbing the current housing market. These levels are low because of all the foreclosures. This new FHA update will take place for loans closed on or after October 4th, 2010.

Here are the new changes HUD will implement on MIP and upfront mortgage insurance.

Upfront Premiums

Mortgage Type
Upfront Premium Requirement
Purchase Money Mortgages and Full-Credit Qualifying Refinances
1% of loan amount
Streamline Refinances (all types)
1% of loan amount

Annual Premiums

LTV Annual Premiums for Loans > 15 years
< or = 95% .85% of Loan Amount
> 95% .90% of Loan Amount

The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected to example below.

LTV Annual Premiums for Loans = or < 15 Years
< or = 90% None
>90% .25% of Loan Amount


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