FHA loans are a great way for some home buyers to get into a property with a low down payment, a good rate, and a higher debt to income ratio. The FHA loan program will be changing on April 1st, 2013 and June 3rd, 2013.
On all FHA loans with case numbers ordered on or after 04/01/2013, the monthly mortgage insurance premium (MIP) will increase by .10 for loan amounts under $625k.
| Loan Term,LTV(%),Previous MIP Rate,New MIP Rate | |
|---|---|
| Greater than 15yr term,down payment < | 5%,1.25%,1.35% |
| Greater than 15yr term,down payment 5%-9%,1.20%,1.30% | |
| Greater than 15yr term,down payment 10%-21%,1.20%,1.30% |
On 06/03/2013, the length required to have monthly mortgage insurance is changing.
| Loan Term,LTV(%),Previous MIP Duration,New MIP Duration | ||
|---|---|---|
| Less than or equal to 15 years,Less than or equal to 78%,5 years,11 years | ||
| Less than or equal to 15 years,Greater than 78% – | 90%,Cancelled at 78% LTV,11 years | |
| Less than or equal to 15 years,Greater than 90%,Cancelled at 78% LTV,Loan term | ||
| Greater than 15 years,Less than or equal to 78%,5 years,11 years | ||
| Greater than 15 years,Greater than 78% – | 90%,Cancelled at 78% LTV & | 5 years,11 years |
| Greater than 15 years,Greater than 90%,Cancelled at 78% LTV & | 5 years,Loan term |
What You Need To Know:
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- Even with the increases, a FHA loan is still a great option. You just have to look at the numbers to make sure it works for you.
- Look at conventional loan products as an alternative. There are major banks who provide loans with high LTV’s.
- Consider delaying your home purchase until you can put a larger down payment.
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