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FHA mortgages change – effective October 4th (0)

Posted: October 26, 2010 By: Dave Ralston

It’s official: FHA was just given authority to change the amount charged to borrowers for both the Up Front and the Annual Mortgage Insurance premiums…and change them they did.

This will impact how you write up your FHA purchase agreements, as well as any monthly payments you might estimate for clients – so I wanted to get word on the new guidelines to you right away.

The new premium amounts will be effective on all FHA case numbers assigned on or after October 4, 2010 – so your clients that already have an FHA transaction in process won’t be impacted, but new FHA clients who come into process on or after October 4th will be subject to the new guidelines.

Here’s what you need to know:

The Up Front Mortgage Insurance premium is now 1.0 % for all standard FHA programs, including on purchase money mortgages. This is a significant change from the 2.25% Up Front Mortgage Insurance typically in place on FHA 30 year Fixed Rate transactions.
…but don’t break out the party hats just yet – the Annual Mortgage Insurance premium is now .90% for LTV’s greater than 95% on 30 year loans…and this is also a significant change from the .55% we’ve been accustomed to using when we calculate the monthly payment.
There are different annual premium amounts for lower loan to values and for 15 year terms, so call me for more details if needed. And by the way, FHA now has the authority to raise the Annual Mortgage Insurance premium “at will”…up to 1.55%…so I’ll be keeping closely tuned to any changes and will be sure to keep you informed.

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