FHA Commissioner David H. Stevens announced, a new premium structure for FHA-insured mortgage loans increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30- and 15-year loans.

“After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” Commissioner Stevens said in a statement.

He continued, “This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.”

On average, new FHA borrowers will pay approximately $40 more per month. The current rate for FHA mortgage insurance on loans above 95% loan to value (LTV) is 0.9% on a 30 year mortgage term and .85% on loan to values (LTV) less than 95%. The new rate hike will be going to 1.15% on LTVs greater than 95% and 1.10% for LTVS lower than 95%.

Most buyers when purchasing a home with FHA financing, put the minimum required investment of 3.5% of the sales price towards their down payment. What will the new rate hike do to your payment? On a $200,000 loan amount, the estimated new monthly payment will change from $150 per month for mortgage insurance to $191.67 per month.

The new structure applies to all new loans insured by FHA on or after April 18, 2011. Existing and reverse mortgage (HECM) loans insured by FHA are not impacted by the pricing change. The current upfront MIP will remain unchanged at 1.0 percent.

Please call with any FHA questions you may have. 800 429-7283