FHA fee cut cancelled – at least for now

On January 9th, HUD announced a cut in the annual (monthly) mortgage insurance fee – it was going from .85% to .60% effective with closings on January 27, 2017. It would save borrowers about $21 on every $100,000 borrowed.  Shortly after the inauguration of President Trump, the new administration announced  that it was rescinding that cut – at least for now.  None of us really know why the cut was announced and then taken back – but for now, FHA fees stay where they were!

What does that mean going forward?  Should you wait to see if HUD does reduce the fee in 2017? Is there a chance that HUD may do that? The answer is possibly – but I would not wait for the fee to decrease.  FHA needs to have a congressionally mandated cash reserve of 2%. They have that now – there were a few years where they didn't have it.  For now, they have met the reserve requirement which is why there is a chance that after the new administration reviews numbers, we may see a decrease in the mortgage insurance.  However, we also expect interest rates to increase this year and home prices have also been increasing. If you wait to see if there is a decrease, you may lose buying power based on an increase in interest rates and/or an increase in home prices.

The current FHA mortgage insurance is still lower than it was for a few years.  FHA rates tend to be lower than conventional rates, so for many buyers, FHA is still a great way to finance a home.  For many buyers, the monthly payment may be lower than a conventional loan and with a minimum down payment of 3.5% and the ability to have a credit score as low as 580, FHA is a great way to buy a home now.

Check with your loan officer and see what you can qualify for with an FHA loan – you may be shopping for a new home sooner than you think!!

 Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

Related Posts

Weekly real estate market update 5/17/24… the number of homes for sale is increasing

đź–¨ Print Article New listings continue to increase and coming soon listings also increased again this week… good news for weeks to come. Transactions that fall through and come back...

April 2024 real estate market update… median sale price highest on record

đź–¨ Print Article Median sale price in April 2024 hit a new peak, even higher than highest sale prices in June (typically the yearly peak) of the last two years....

Subscribe to Our Newsletter for Market Updates & Mid-Century Modern Listings

Our weekly HomesMSP Update includes current local market information and a curated list of mid-century modern properties for sale, plus posts from an inspector, a lender, a stager, info about neighborhoods, life in the Twin Cities… even recipes!


Blog Categories


Sharon and John Hensrud

About Us

The HomesMSP Team is committed to meeting you where you are and listening… really listening to understand you so we can use our extensive knowledge of the market and local neighborhoods to give you personalized service.