FHA Mortgage Insurance Increases For Tennessee April 1, 2012

Mortgage and Lending with VanDyk Mortgage Corporation NMLS# 95835,Corp 3035

On April 1, 2012, FHA mortgage insurance premiums (both the upfront and monthly Premiums) will increase to replenish the FHA depleted accounts.

Although FHA  mortgage interest rates continue to remain at all-time lows, FHA mortgage fees are increasing, making the cost of buying a home or refinancing a home more expensive.  The consecutive increase in FHA mortgage insurance premiums may limit a home buyers “buying power” but protects the nations primary “low cost” mortgage program for homebuyers. 

There was a great article in the Washington Post explaining the current financial situation of FHA if you are interested in learning more – FHA Bailout

Currently, a homebuyer can qualify for a FHA mortgage in Tennessee with a 640 credit scoreas low as 640 , 3.5% down payment, and no money/assets in reserves (You can even use gift funds for your down payment).   


How Does The New FHA Mortgage Insurance  Affect the Homebuyer?

FHA covers the  payment “risks” by charging an upfront mortgage insurance premium fee in addition to  a monthly mortgage insurance premium.

Currently, homebuyers pay an upfront mortgage insurance amount of 1% (of the loan amount) and a monthly premium of 1.15%.

Under the new FHA increase in mortgage insurance, home buyers will pay an upfront mortgage insurance fee of 1.75% and a monthly fee of 1.25%

A comparison – Let’s look at a $200,000 mortgage

- Current FHA Upfront Mortgage Insurance Premium:  $1,930
- New FHA Upfront Mortgage Insurance Premium: $3,377

- Current FHA Monthly Mortgage Insurance Premium: $187/month
- New FHA Monthly Mortgage Insurance Premium: $205/month

AlternativesTo The New FHA Mortgage Insurance  

If your credit score is over 680, then you may be eligible for a conventional Fannie Mae mortgage which requires 5% down payment.    Considering the $200,000 home purchase, you could save approximately $63/month and eliminate the upfront mortgage insurance premium.

If you are a first-time homebuyer, I  would also recommend looking into the Tennessee USDA Home Loan Program.  This loan program offers a zero down option with a low monthly mortgage insurance premium.

Please feel free to contact me today to discuss your opitions for purchasing your new home.


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We offer VA Loans,  FHA Loans, USDA Loans, and more across Alabama, Louisiana, Texas and Tennessee


Bill McDonald NMLS # 95835

VanDyk Mortgage NMLS # 3035


Bill McDonald-VanDyk Mortgage

705 Gate Ln Suite 202 104

Knoxville, TN 37909

(865) 686-8711

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Comments (1)

Brian Skaar
VanDyk Mortgage - VA, FHA, Conventional, VA Jumbo, Jumbo, Purchase Loans, & Refinance, Direct Lender - San Diego, CA
VA, Jumbo, FHA & Conv Direct Lender (760) 752-4480

Nice post, great info.   I ama big fan of FHA Loans as well, and how they can help folks buy and refinance.  As you mentioned,  Conventional loans are beoming a nice alternative in many cases.

Mar 22, 2012 12:55 AM