FHA Annual Mortgage Insurance Premiums Reduced for 2023 Loans
Author bio section
I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
FHA annual mortgage insurance premium was reduced today for loans endorsed on or after March 20,2023, per the latest announcement.
What is FHA Mortgage Insurance Premium?
FHA (Federal Housing Administration) loans are insured by Housing and Urban Development. To insure the lenders against default, it charges insurance premiums from the borrowers. There are two kinds of insurance premiums – Upfront Mortgage Insurance Premium (UFMIP) and Annual Mortgage Insurance Premium (MIP).
How much is FHA’s Upfront Mortgage Insurance Premium (UFMIP)?
FHA’s UFMIP is 1.75% of the loan amount. So, if you are borrowing $400,000, your upfront mortgage insurance premium will be $7,000. You have the option of adding this to your loan amount and do not have to bring this cash to the closing table. If you decide to do that, in this example, your loan amount will be $407,000 ($400,000 of base loan amount + $7,000 of UFMIP). In the recent announcement, FHA didn’t make any changes to this.
How do I calculate FHA Annual Mortgage Insurance Premium?
The FHA annual mortgage insurance premium factor is multiplied by the base loan amount and then divided by 12 to divide the annual mortgage insurance premium into 12 equal installments over the course of the year. This is added to your monthly mortgage payment that you pay to your lender/servicer, so you don’t have to pay it separately to FHA. In the previous example, if the annual MIP was 50 basis points (bps) or 0.5%, it would be $400,000 * 0.5% = $2,000 for the year. This will result in $166.67 added to your monthly mortgage payment ($2,000/12).
What is the new FHA’s Annual Mortgage Insurance Premium for 2023 loans?
After the reduction announced today, most borrowers will pay 50 bps (or 0.5% of the loan amount) as the FHA annual mortgage insurance premium. The MIP is dependent on the loan term (higher for a 30-year loan than a 15-year loan), down payment (lower for >10% down payment), and loan amount (higher for loan amounts greater than $726,200.
See the table below for all possible combinations. The highlighted numbers are updated by FHA and are reduced compared to before.
Related Posts
- 10000
Ultimate guide to Upfront and Monthly Mortgage Insurance Premiums (MIP/PMI) rates for FHA purchase loans and (streamline) refinances. FHA charges both an upfront mortgage insurance premium and monthly mortgage insurance on almost all the loans it insures. On December 23, 2011, President Obama signed into law the Temporary Payroll Tax… - 10000
What is Private Mortgage Insurance (PMI)? If you purchased a home with less than a 20% down payment, or you’re about to, you’re familiar with Private Mortgage Insurance (PMI). PMI is an ‘evil villain’ in the eyes of family and friends who’ll likely tell you to “avoid it at… - 10000
In this post, let's look at FHA Streamline loan information, benefits of getting such a. refinance, current FHA. streamline rates, and the best lenders to work with. for such a refinance. What is FHA Streamline Refinance? Refinancing of a current FHA insured loan into another FHA insured loan is called… - 95FHA today increased it's upfront mortgage insurance premium requirements for Bay Area FHA Home Loans. Upfront Mortgage Insurance is the money that FHA collects at the time of closing a mortgage to insure the loan against default. Currently, this premium is 1.75% for most purchase and refinance transactions. However, effective…
- 95
What are the Mortgage Options for First Time Homebuyers? Buying your first home is a unique experience. For many, it comes with a mix of excitement and worry. The process is unfamiliar, and you don’t want to make any mistakes. It is also a decision that could affect your financial…
