FHA Update – FHA Announces Increase in MI Effective April 1, 2013
In Mortgage Letter dated 01/31/2013, HUD announced that the Federal Housing Administration (FHA) will increase its annual mortgage insurance premium for most new mortgages by 10 basis points or by 0.10%, and FHA will increase premiums on jumbo mortgages ($625,000 or larger) by 5 basis points or 0.05%. It will also change the MIP from canceling at 78% LTV to being for the life of the loan on most FHA loans as of June 3, 2013. You can read the letter at http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf
In addition, FHA will:
- require most of its borrowers to continue paying annual premiums for the life of their mortgage loan
- require lenders to manually underwrite loans for which borrowers have a decision credit score below 620 and a total DTI ratio greater than 43%
- announce a proposed increased down payment requirement for mortgages with original principal balances above $625,000. The minimum down payment for these mortgages will increase from 3.5% to 5%
- increase its enforcement efforts with regard to aggressive marketing “misleading” borrowers who have had previous foreclosures with the “false pretense” that they can “automatically” qualify for an FHA-insured mortgage three years after their foreclosure.
The current rate of annual MIP for FHA loans with 30-year term and LTV greater than 95% is 1.25% and will increase to 1.35% on April 1, 2013. FHA is also removing the exemption from the annual MIP for loans with terms of 15 years or less and LTVs of less than or equal to 78 percent at origination. These loans will now have monthly MIP calculated on an annual basis of .0.45%.
The annual MIP for loans with LTV of less than 90% will have the MIP for 11 years or the life of the loan whichever comes first. If LTV is greater than 90% then the MIP is for the life of the loan.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713