We have all heard the rumors over the last few months that the Federal Housing Administration (FHA) planned to increase their mortgage insurance premiums, but no one really knew when.
In yesterday's press release FHA Takes Additional Steps To Bolster Capital Reserves, acting FHA Commissioner Carol Galante announced a new premium structure for FHA-insured single family mortgage loans. 
The Upfront Mortgage Insurance Premium (UFMIP), typically financed, will increase from 1.0% of the base loan amount to 1.75% of the base loan amount. On a $300,000 purchase price, this increase will affect a borrower's monthly payment by about $10 per month at today's interest rates.
FHA will also be increasing the Annual Mortgage Insurance Premium (MIP) which is paid monthly by 0.10% for all FHA insured loans with FHA case numbers assigned on or after April 9, 2012. There will be an additional 0.25% increase (a total of 0.35% over current levels) for loans greater than $625,500 with FHA case numbers assigned on or after June 1, 2012.
Assuming that interest rates stay at similar levels, how will the MIP increase affect a borrower's payment? Here are a couple examples:
- Purchase price $200,000 with new UFMIP and MIP - increase of $23 per month
- Purchase price $300,000 with new UFMIP and MIP - increase of $34 per month
- Purchase price $400,000 with new UFMIP and MIP - increase of $46 per month
- Purchase price $500,000 with new UFMIP and MIP - increase of $57 per month
- Purchase price $600,000 with new UFMIP and MIP - increase of $69 per month
For High Cost Areas like San Diego County where FHA insured mortgages are allowed up $697,500 ($729,750 in other parts of CA), the additional increase after June 1st will have the following effects:
- Base loan amount $625,500 (purchase price of about $648,186 with 3.5% down payment) with new UFMIP and MIP - increase of $204 per month
- Base loan amount $697,500 (purchase price of about $722,797 with 3.5% down payment) with new UFMIP and MIP - increase of $228 per month
- Base loan amount $729,750 (purchase price of about $756,217 with 3.5% down payment) with new UFMIP and MIP - increase of $239 per month
According the FHA's Carol Galante, "the mortgage insurance premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013."
IMPORTANT REMINDER: These changes are for properties with FHA Case numbers assigned on or after April 1st (and June 1st for larger loans). The changes do not affect loans with FHA Case numbers assigned prior to April 9th, 2012.
Have questions regarding the FHA Mortgage Insurance Increase? Contact Kevin Kueneke, San Diego FHA Mortgage Loan Officer with AmeriFirst Financial, by calling (760) 500-1919 or click here to email.
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