Mortgages: FHA MIP Takes a Hike
FHA says it remains fiscally sound, looks to further strengthen its future position.
The Federal Housing Administration wants to stay flush. One step it’s taking is increasing its annual mortgage insurance premium by 25 basis points on 30-year and 15-year mortgages. The change takes effect April 18.
The move was announced in February in the Department of Housing and Urban Development’s Mortgage Letter 11-10, which stated that the move will “ensure that FHA will continue its historic role of providing a home financing vehicle during periods of economic volatility and its mission of helping underserved borrowers.” The HUD letter also said FHA anticipates “this increase will have minimal impact on borrowers but will significantly strengthen the capital position” of FHA’s Mutual Mortgage Insurance Fund. FHA’s up-front mortgage insurance premium of 1 percent of the loan amount remains unchanged.
In the letter, HUD provided an example of the size of premium increases FHA borrowers could expect this spring: For borrowers who purchased a $163,000 home with 3.5 percent down, the FHA annual MIP monthly payment would increase $33.
This increase applies to all mortgages insured under FHA’s Single Family Mortgage Insurance Programs, except the following:
• Title I
• Home Equity Conversion Mortgages
• HOPE for Homeowners
• Section 247 (Hawaiian Homelands)
• Section 248 (Indian Reservations)
• Section 223(e) (Declining Neighborhoods)
• Section 238 (c) (Military Impact areas in Georgia and New York)
