Home buyers love FHA loans for one simple reason: they only require a 3.5% downpayment. So, it’s a pretty big deal that the government agency that oversees the program, HUD (Department of Housing and Urban Development), has just enacted major changes. From Shannon Bagshaw, mortgage pro over at Loan South:
HUD has made their official announcement. Mortgage Insurance Premiums on all FHA loans will be affected. The upfront mortgage insurance is being reduced from 2.25% to 1.00%. The monthly premium will be increased from .55% to .90%. The net result is an increased monthly payment and making the program much more comparable to conventional financing from a cost standpoint.
Below is an example of the impact of the new FHA premiums. The premiums will be effective for all case numbers ordered after October 4th.
|Monthly Payment: Principal, Interest and Mortgage Insurance|
|Loan Amount||Current FHA||New FHA|