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FHA Single-Family Mortgage Insurance Premiums Changing
The Federal Housing Administration FHA) recently announced a new mortgage insurance premium (MIP) structure, which will take effect on Oct. 1 for FHA-insured single-family loans.
The up-front MIP for all home buyers will be set at 1.75%. The annual MIP remains at 55 basis points for 30-year loans having loan-to-value ratios (LTVs) greater than 95% and 50 basis points for 30-year loans with LTVs of 95% or less.
The FHA has been operating with a system of risk-based MIPs since July 14. Under the risk-based structure, the up-front MIP ranges from 125 basis points for lower-risk borrowers (those with low LTVs and high credit scores) to 225 basis points for riskier borrowers (those with high LTVs and low credit scores).
However, the Housing and Economic Recovery Act of 2008 placed a 12-month moratorium on risk-based premiums for FHA-insured loans. After this change, some lower-risk borrowers will face up-front MIPs that are 25 to 50 basis points higher, while the up-front MIP may decline for borrowers who have lower credit profiles.
The up-front MIP for FHA-insured mortgage loans is typically rolled into the new mortgage.
According to the FHA, loans that have FHA case numbers before Oct. 1 will be eligible for risk-based premiums.
The MIP structure listed below will apply to loans with FHA case number on or after Oct 1. This structure will be in effect until Sept. 30, 2009, at which time the FHA will provide further guidance on its MIP structure.
Up-front MIP
Purchase Money Mortgages and Full Credit Refinances: 1.75%
Streamline Refinances: 1.50%
FHASecure: 3.00%
Annual MIP
Purchase Money Mortgages and All Refinances:
Maturity Greater than 15 years:
LTV less than or equal to 95%: 50 basis points
LTV greater than 95%: 55 bps
Maturity Less than 15 years:
LTV less than or equal to 95%: no annual MIP
LTV greater than 95%: 25 bps
FHASecure:
LTV less than or equal to 95%: 50 bps
LTV greater than 95%: 55 bps
For more information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597.
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