FHA Makes it Harder to Qualify by Increasing Monthly Insurance

Congress wasted no time in passing the bill H.R. 5981. This bill gives FHA the ability to modify it’s current annual mortgage insurance premium. The move will provide an addtional $300 Million to FHA’s Mutual Mortgage Insurance Fund.

Below are the changes  that took place for FHA case numbers past October 4th, 2010:

  • OLD UPFRONT MORTGAGE INSURANCE PREMIUM 2.25%
  • NEW  UPFRONT MORTGAGE INSURANCE PREMIUM 1.00%
  • OLD MONTHLY MORTGAGE INSURANCE PREMIUM .55%
  • NEW MONTHLY MORTGAGE INSURANE PREMIUM .85% – .90%

The good news: Costs less upfront when buying a new home due to a decrease in the Up Front Mortgage Insurance (from 2.25% to 1.00%)

The bad news: Increased Monthly Mortgage Insurance- reducing the amount a homebuyer can borrower.  If you are refinancing  into a new FHA loan you will also have to pay the higher monthly mortgage insurance.

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