In a breaking NEWS ALERT on DSnews.com, it has been announced that President Obama will reduce the annual insurance premiums charged by FHA from 1.35% to 0.85%, which would apply to loans with an LTV of 95% or greater. There is no indication that loans with an LTV of less than 95% will pay a lesser premium, but that would seem to follow along with a reduction in the fee for loans with an LTV of 95% or greater. DSnews indicates that it has not yet been able to confirm this report, but this would be in line with pressure that has been put on HUD and FHA to reduce fees.
There is no indication of any reduction of the upfront fee charged by FHA, but the reduction of the annual premium will allow more home buyers to meet DTI ratios and have an easier time qualifing for financing.
This report was first announced by Bloomberg.
Currently annual premiums are 1.35% for a loan with an LTV of 95% or greater and 1.30% for a loan with an LTV of less than 95%. The upfront fee charged by FHA is 1.75% of the loan amount regardless of the loan LTV and can be included as part of the amount financed.
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