FHA Mortgage Insurance Changes and Refi Program Updates

New Monthly Mortgage Insurance Premium Schedule

The MIP schedule for FHA loans with terms greater than 15 years (e.g. 30 year fixed FHA) is as follows :

  • For loans with LTV greater than 95 percent: 1.250% percent annually ($200,000 loan amount would have an a monthly mortgage insurance payment of $208).
  • For loans with LTV less than, or equal to, 95 percent : 1.200% percent annually.

New Up-Front Mortgage Insurance Premium

  • The Up-Front Mortgage Insurance Premium was increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage and will continue to calculate actual premium charges against the base loan amount before adding any financed UFMIP. This change is effective for case numbers assigned on or after April 9, 2012. (Example-$200,000 loan will have $3,500 added to the loan amount)

FHA Streamline Refinance MIP Rates for ‘Older’ Loans (Refi Program)

Not everyone will pay the FHA’s new mortgage insurance rates. For FHA-backed homeowners whose mortgages are older; whose loans were endorsed prior to June 1, 2009, FHA mortgage insurance is getting cheaper, not more expensive. Some current FHA-backed homeowners can now use the FHA Streamline Refinance program without fear of “more mortgage insurance”.

New Up-front Mortgage Insurance Premium Schedule For ‘Older’ Loans (Refi Program)

Beginning June 11, 2012, all new FHA mortgages replacing a mortgage from prior to June 1, 2009, will pay an upfront mortgage insurance premium of 0.01%, or $10 per $100,000 borrowed.

This is a major reduction off the “full price” UFMIP paid by everyone else.

New Monthly Mortgage Insurance Premium Schedule For ‘Older’ Loans (Refi Program)

Also beginning June 11, 2012, if you’re replacing an FHA mortgage endorsed prior to June 1, 2009, and your new FHA mortgage has a term greater than 15 years (e.g.; 20-year fixed FHA, 30-year fixed FHA), your new loan’s MIP schedule is as follows :

  • For loans with LTV greater than 95 percent : 0.55% percent annually
  • For loans with LTV less than, or equal to, 95 percent : 0.55%% percent annually

FHA Mortgage Info You Should Know

Many potential property owners in the Burlington, VT area are not aware of the benefits of using the FHA mortgage program for their loan.  Federally Insured Mortgages through the Federal Housing Administration offer lower down payments than conventional mortgages. FHA mortgages also offer flexibility in qualifying requirements and seller assistance.

Benefits of FHA Financing:

  • Available on 1-4 unit and FHA approved condominiums.
  • Down payment requirements as little as 3.5%.
  • Down payment does not have to be borrower’s own funds. The full 3.5% down payment requirement can be 100% gift funds from family member, borrower’s employer and even a close friend.
  • Any closing costs including origination fee, discount points, Up Front Mortgage Insurance, Buydown costs and prepaid items can be paid by the seller up to 6% of the purchase price.
  • Private Secondary financing is permitted by charitable organization, government agencies and family members.
  • Less restrictive credit guidelines allowing credit scores as low as 640.
  • No reserve requirements on 1 and 2 family properties. Three months reserves are required on 3 and 4 family properties from borrower’s own funds.
  • When purchasing a 2-4 unit property, 85% of rental income can be added to the qualify.
  • Non-owner occupants are allowed on single family homes and condominium purchases (ie. Parents cosigning).

As you can probably tell, FHA loans are ideal for those borrowers who may have limited down payment resources, and/or an acceptable, but less than perfect credit score, or limited credit history.

FHA loans do require some specific appraisal and inspection requirements which you can review in this document: FHA Info That You Should Know

If you are wondering if an FHA loan is right for you, or if you are a real estate professional who may need more details on the FHA programs for your Burlington Vermont area real estate clients, please give us a call at 802-658-5599 x3111.