FHA Mortgage Insurance Premiums: They’re More Affordable Than You Think
Our FHA MIP Chart shows how much FHA loan PMI has gone down since 2015.
You’ve been pre-approved for an FHA loan, but now you’re concerned about the FHA mortgage insurance premiums you’ll have to pay. Not to worry! We’ve put together an FHA MIP Chart to illustrate the FHA mortgage insurance reduction and help ease your mind.
It’s true that this type of loan requires you to pay FHA mortgage insurance to protect the lender against losses that result from defaults on home mortgages. FHA loan PMI isn’t good or bad, it’s simply a way for you to obtain a mortgage with a low down payment. In the case of FHA loans, lenders are willing to take them on because the Federal Housing Administration insures them. You will be able to finance the Up Front FHA Mortgage Insurance Premium (UFMIP) into your loan. You will also be responsible for paying an annual FHA mortgage insurance premium.
Now for some good news about FHA mortgage insurance.
In order to help borrowers afford their FHA loan PMI, the Federal Housing Administration instituted an FHA mortgage insurance reduction for those looking to buy or refinance. This FHA MIP reduction took effect on January 26, 2015 and allowed individuals and families to significantly save on annual homeownership costs. The change reduced the amount of private FHA mortgage insurance borrowers have to pay on home loans by 0.5%. The FHA MIP reduction is applicable on mortgages with terms greater than 15 years.
The FHA MIP Chart below shows potential savings based on an FHA home loan with a loan-to-value (LTV) greater than 95% and a term greater than 15 years.
||PREVIOUS MIP (1.35%)
||NEW MIP (0.85%)
||EST. MONTHLY SAVINGS
||EST. ANNUAL SAVINGS