FHA – Annual MIP Reduction
The Federal Housing Administration (FHA) has announced, effective for case numbers endorsed on and after 03/20/2023, a 30 basis point reduction in the annual premium charged to mortgage borrowers.
The cut, widely anticipated by the industry, will result in mortgage insurance premiums (MIP) of 55 bps for most borrowers, down from 85. The reduction also amends the Base Loan amount threshold used to establish MIP rates to the national conforming loan limit of $726,200, which increased from $625,500. Please refer to the following for the 03/20/2023 Annual Mortgage Insurance Premium MIP reduction:
Please Note:
On February 22, 2023, HUD announced a 30 basis point MIP reduction on certain Kentucky FHA loans. According to the government agency, an estimated 850,000 borrowers could benefit this coming year, and the average Kentucky FHA homeowner will save $800 annually.
What you need to know:
Contact your borrowers and prospects who are currently in an Kentucky FHA loan or could benefit from one to discuss how this change can work to their advantage.
FHA Reduces Annual Mortgage Insurance Premiums
by 30 Basis Points to Support Affordable Homeownership
The Federal Housing Administration (FHA) announced today through Mortgagee Letter 2023-05 a 30 basis point reduction to the Annual Mortgage Insurance Premiums (annual MIP) it charges borrowers for FHA-insured Single Family Title II forward mortgages. This reduction supports the Biden-Harris Administration’s goals of making homeownership more accessible and affordable for the nation’s homebuyers. FHA mortgage insurance facilitates broader availability of mortgage financing to those not adequately served by the conventional mortgage market, particularly households of color for whom FHA-insured mortgages have been a cornerstone of access to affordable homeownership.
Today’s Mortgagee Letter provides additional information for mortgagees to implement the annual MIP reductions effective for mortgages endorsed for FHA insurance on or after March 20, 2023.
FHA estimates this reduction will benefit approximately 850,000 borrowers over the coming year, saving them $678 million in aggregate in the first year of their FHA-insured mortgage. For the average borrower purchasing a one-unit single family home with a down payment of 3.5 percent and a mortgage amount of $467,700 the national median home price as of December 2022 – FHA’s annual MIP reduction will save them more than $1,400 in the first year of their mortgage.
Wednesday, the Biden-Harris Administration announced reduced costs for FHA-backed mortgages.
In lowering annual mortgage insurance premiums 0.30 percentage points, the government makes homeownership more affordable and attainable for first-time buyers.
| Base Loan Amt. | LTV | Annual MIP |
|---|---|---|
| ≤$625,500 | ≤95.00% | 80 bps (0.80%) |
| ≤$625,500 | >95.00% | 85 bps (0.85%) |
| >$625,500 | ≤95.00% | 100 bps (1.00%) |
| >$625,500 | >95.00% | 105 bps (1.05%) |
Kentucky FHA Loans Less Than or Equal to 15 Years MIP Chart👇
| Base Loan Amt. | LTV | Annual MIP |
|---|---|---|
| ≤$625,500 | ≤90.00% | 45 bps (0.45%) |
| ≤$625,500 | >90.00% | 70 bps (0.70%) |
| >$625,500 | ≤78.00% | 45 bps (0.45%) |
| >$625,500 | 78.01% – 90.00% | 70 bps (0.70%) |
| >$625,500 | >90.00% | 95 bps (0.95%) |
When can I get the FHA mortgage insurance off my Mortgage Loan? See chart below 👇👇
In summary, FHA loans have few drawbacks other than the mortgage insurance in my opinion. It is a great first time home buyer program or borrowers with past credit problems to get into a house of their own with very little out of pocket, at a low 30 year fixed rate, and no prepayment penalty
Questions about qualifying for a FHA loan in Kentucky . Give me text, call or email below. Love to help you out on your next home or refinance in Kentucky
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/
— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.
Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans | October 17, 2018 at 3:54 pm | Tags: fha gift funds, fha loan kentucky, FHA Loans Kentucky Housing First time home buyer, fha mortgage, fha mortgage loan, gift funds for fha mortgage, kentucky fha loans |
FHA mortgage insurance, typically referred to as MIP, is the one closing cost that is unique to FHA mortgage programs.
**Every FHA mortgage must have mortgage insurance regardless
of the amount of the down payment.**
There are two types of mortgage insurance for FHA insured loans – Up-front Mortgage Insurance Premiums and Monthly Mortgage Insurance Premiums.
Up-front Mortgage Insurance Premium (UFMIP)
UFMIP is calculated at 1.75% of the base loan amount on all loans, regardless of the down payment amount. This insurance protects the lender against losses in the event that the borrower defaults on the loan.
**The entire amount of the UFMIP can be financed into the loan amount!**
For example:
What really happens during an FHA mortgage transaction is that the borrower owes FHA a lump sum mortgage insurance premium. The lender making the FHA loan will actually lend the money for the premium to the borrower and send the money to FHA so that the mortgage will be insured.
Monthly Mortgage Insurance Premium
In addition to the UFMIP, there may be a monthly premium due as well. The monthly premium is .80% of the base loan amount if the loan amount is less than or equal to 95% of the value of the home. If the loan amount is over 95% of the value of the home, the monthly premium is .85% of the base loan amount..
On a 30 year fixed loan, the monthly payment would be calculated as follows:
$100,000 x .80% = $800 / 12 months = $66.67 per month
Effective January 1, 2009, the minimum down payment required on an FHA loan is 3.5% of the purchase price.
Any deposit (usually called earnest money) that you are required to give to your realtor at the time of an accepted purchase contract will count towards your 3.5% down payment. The appraisal fee collected at the time of inspection will also count towards your 3.5% down payment.
If, for example, you are purchasing a $100,000 house, your minimum down payment required would be $3,500. If your seller/realtor required you to put down $500 in earnest money on top of the $300 for your appraisal, your down payment would be lowered to $2,700 ($3,500 – $500 – $300 = $2,700).
Down Payment As A Gift
If a borrower does not have 3.5% of his or her own money to put down towards the home purchase, FHA allows that amount to be in the form of a gift to the borrower. The gift must be from a qualified source, such as a family member, employer or significant other. The source of the gift must be able to provide proof that they have the money in an account registered in their name prior to transfer to the borrower.
In some areas, this gift may also be grant money from a state or local municipality, if such funds are available.
Kentucky Home Buyers credit scores are one of the largest factors in determining the amount of a down payment for an FHA loan. A credit score of 580 or higher, 3.5 percent is the minimum required for a down payment. Anyone with a credit score of 500 to 579 will have to save 10 percent for a down payment to obtain an FHA loan.
What Are Mortgage Insurance Requirements on Kentucky FHA Loans?
FHA loans are required to pay mortgage insurance premiums, often known as upfront mortgage insurance premiums and monthly annual premiums.
For a homeowner who borrows $150,000, this means the upfront mortgage insurance premium would be $2,625 and your annual premium would range from $675 ($56.25 per month) to $1,575 ($131.25 per month), depending on the length of the mortgage.
Unlike traditional mortgage insurance premiums, homeowners are required to pay FHA premiums for the entire term of the mortgage. The only time you can stop paying them is to refinance into a non-FHA loan or to sell the house.
Down Payment Gifts and Rules for Kentucky FHA Loans Kentucky borrowers choose an FHA loan can receive money as a gift to help towards the total amount of the down payment.
There are several rules that homeowners need to keep in mind. Gifts can come from friends, family members, labor unions and employers, according to data from the Department of Housing and Urban Development (HUD).
Even non-profit organizations can provide money for a contribution toward a down payment.
In addition, each state offers various assistance programs for down payments for both FHA buyers in Kentucky lacking the down payment.
People obtaining an Kentucky FHA loan are also eligible for these programs. I.e. Kentucky Housing Dap Funds, Welcome Grants In Kentucky
Kentucky FHA Mortgage Lender 