Mortgage Insurance Premium Reductions

This morning HUD announced a 25 basis point reduction in the annual MIP fee effective for loans with a closing/disbursement date on after January 27, 2017. That takes the fee from 80 to 55 bps for the loan terms of <= $625.5k loan size and <=95% LTV. The new MIP for loans >95% LTV is now 60 bps vs. 85 bps earlier.

What does that really mean? Right now on a $100,000 FHA loan monthly MIP is $70.83 (.85% annually). With this change, it will go down to $50 a month (.60% annually).  How does that help? When applied to the Principal and Interest, that $20 is about another $4000 of buying power.

Additionally, HUD is eliminating the distinction between jumbo and non-jumbo loan size. As such, loans greater than $625.5k will now have the same MIP as non-jumbo loans.

Please use the following link to view this morning’s HUD notice.