FINALLY!!! HUD just announced that the mortgage insurance on FHA mortgages will be reduced by 30 basis points on most mortgage loans.
FHA mortgages typically have two forms of mortgage insurance. Borrowers pay for both an upfront premium, which is often added to the loan amount and financed over the life of the loan and an annual premium, which is paid monthly. The mortgage insurance which has been reduced is the annual mortgage insurance.
From HUD’s press release today:
“The average FHA borrower purchasing a one-unit single family home with a $265,000 mortgage will save approximately $800 this year as a result of FHA’s premium reduction. For the same borrower with a mortgage of $467,700 – the national median home price as of December 2022 – FHA’s annual MIP reduction will save them more than $1,400 in the first year of their mortgage. In addition to providing overall savings to borrowers, a lower annual MIP can also help more people qualify for a mortgage.”
To determine how much the monthly mortgage insurance premium is, you multiple the loan amount by the MIP (mortgage insurance premium) bps (basis points) and then divide by 12 months.
This reduction to annual FHA mortgage insurance premiums will go into effect on FHA mortgages endorsed on March 20, 2023 and after.
If you’re considering buying or refinancing your home, please contact me!