FHA announced that they are reducing the monthly mortgage insurance on all loans! This will help those using FHA financing by lowering their payments. The monthly premium is being cut by 30 basis points. This applies to new mortgages endorsed on or after March 20, 2023.
This will lower the mortgage insurance on most loans from .85% to .55% and save on average about $67/month. There isn’t any change to the upfront mortgage insurance premium that is rolled into FHA loans, that will stay at 1.75%.
Mortgage terms more than 15 years: If your loan to value is equal or less than 95%, the MIP will be 50 basis points. If your loan to value is over 95%, the MIP will be 55 basis points. The MIP will still stay on the mortgage for the mortgage term if your loan to value is over 90%, but if your loan to value is 90% or less, the MIP is there for 11 years.
Mortgage terms equal to or less than 15 years: If your loan to value is 90% or less, the MIP is 15 basis points. If your loan to value is over 90%, the MIP is 40 basis points.
An example of this is if you are buying a home at $300,000 and putting the minimum down (3.5%), your monthly MIP will be $132.69. Currently the MIP is .85 and it would cost $205.06/month. The new rates will save you $72.37/month!
For many new buyers, this will make FHA financing more attractive. With conventional loans your mortgage insurance does go away once you have enough equity in the home, but the rates may be more expensive. Also Fannie and Freddie just made pricing adjustments to their interest rates, so FHA may be a lower rate and lower mortgage insurance.
Talk to your loan officer and see if FHA financing may be a better option with the new mortgage insurance premiums.