Effective on all case numbers issued on or after April 5, 2010, HUD will increase the upfront mortgage insurance premium for FHA loans from the current rate of 1.75% to 2.25%. Dallas area home buyers that want to take advantage of the lower upfront MIP premiums must have a property under contract prior to April 5 and their mortgage lender must request an FHA case number on the property in order to secure the current lower premium of 1.75%.
The increase in upfront MIP premiums is due to FHA falling below the required 2% level of reserves in order to operate. When reserves fall, the deficit has to be made up in some way.
The increase in premiums will equate to a $500 increase for every $100,000 in loan amount. A $200,000 loan will see an increase of $1,000 in upfront premium.
WILL MONTHLY FHA MIP PREMIUMS ALSO INCREASE?
NO, not at this time. The following premiums will remain in force for FHA loans:
LOAN TERMS GREATER THAN 15 YEARS (20, 25 and 30 year terms):
For loans with a loan to value ratio LESS THAN OR EQUAL TO 95%, the monthly premium is .5% of the initial loan amount, divided by 12. For a $100,000 loan, this works out to be $41.66 per month.
For loans with a loan to value ratio GREATER THAN 95%, the monthly premium is .55% of the initial loan amount, divided by 12. For a $100,000 loan, this works out to be $45.83 per month.
LOAN TERMS OF 15 YEARS OR LESS:
For loans with a loan to value ratio GREATER THAN 90%, the monthly premium is .25% of the initial loan amount, divided by 12. For a $100,000 loan, this works out to be $20.83 per month.
For loans with a loan to value ratio of LESS THAN OR EQUAL TO 90%, FHA does not require monthly mortgage insurance.
Buyers who secure a purchase contract prior to the April 5, 2010 deadline should consult with their lender to ensure that an FHA case number is issued on the property to secure the lower premium.
The complete information regarding this change can be found here.
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