Over the past few years FHA has increased their premiums to cope with mounting losses to their mortgage insurance fund; starting April 1st 2012 they’re at it again. If you go into contract on or after April 1st 2012 the upfront mortgage insurance premium will increase from the current 1% to 1.75%; on a $300,000 loan that’s additional $2250.
The monthly mortgage insurance will also increase 10 basis points. On a $300,000 loan with a 30yr fixed FHA loan with a 3.5% down payment the monthly premium will jump from 115 basis points or $287.50/month to 125 basis points or $312.50/month; an increase of $25/month.
On loans over $625,500, for all case numbers assigned on or after June 1st 2012, the monthly premium will increase 25 basis points to 140; on a $700,000 loan that’s an increase of $145.84/month.
This change will encourage more potential homebuyers to look into traditional conventional financing with 5% down and lower overall costs.