In early 2023, the Federal Housing Administration (FHA) reduced annual mortgage insurance premiums (MIP) from .85% to 0.55%. The last time the FHA reduced its mortgage insurance premiums for U.S. homebuyers before this was back in 2015.
Thanks to these changes, it is an excellent time for new homeowners to consider an FHA loan to finance a home purchase.
A mortgage insurance premium reduction of 0.3 percent will be a welcome savings for new home buyers. The example scenario below demonstrates just how significant this recent FHA MIP reduction really is.
Before the FHA Mortgage Insurance Premium Reduction:
$100,000 Loan Amount
Current Annual Mortgage Insurance = 0.85% of Loan Amount
$100,000 X 0.85% = $850 (Or $70.83 per Month)
After the FHA Mortgage Insurance Premium Reduction:
$100,000 Loan Amount
New Annual Mortgage Insurance = 0.55% of Loan Amount
$100,000 X 0.55% = $550 (Or $45.83 per Month)
Homeowners are slated to save an average of $800 per year as a result of this reduction in FHA mortgage insurance premiums.
The following table shows the existing and the new annual MIP rates by amortization term, base loan amount and Loan to Value (LTV) ratio.
This premium change will go into effect officially on March 20, 2023 – however, some lenders are honoring the new rates effective immediately.
Please see Mortgagee Letter 2023-05 by the U.S. Department of Housing and Urban Development for the official notice of this change to FHA MIP rates.
You can also give us a call at 518-782-1202 or contact us online with any questions you have regarding this important change. We can help you determine how this might impact you, and walk you through your options if you’re interested in taking advantage of this reduction.
If you are currently in an FHA Mortgage with your Mortgage Insurance Premium of 0.85% or higher, please contact Maple Tree Funding to see if refinancing your home mortgage is right for you. As is evidenced by the example above, there may be big savings in store for first time homebuyers and other individuals eligible for FHA home loans.
Interested in learning more about FHA mortgages and the other NY home loan options that might be available to you? Check out the following resources for more information:
FHA Mortgages – Learn about the advantages of FHA mortgages, plus take a look at the qualification requirements to find out if an FHA loan is a good fit for you.
NY Mortgages and Home Loan Options Available – Get the details about the various mortgage programs available for home buyers in New York.