Effective April 18th 2011, FHA will increase the Monthly Mortgage Insurance cost, the Up Front Mortgage Insurance Premium will remain the same. Below are the details:
The Monthly Mortgage Insurance will increase .25%.
The Upfront Mortgage Insurance Premium remains the same, at 1.00% of the loan amount.
The Monthly Mortgage Insurance is now 1.15% for the maximum loan-to-value (which is 96.5%, aka a 3.5% down payment).
This means that for every $100,000 borrowed, the monthly mortgage insurance goes up $250/year, or $20.83/month.
On a $400,000 loan amount, the mortgage insurance cost is:
400,000 x 1.15% = $4600/year or $383.33/month.
And the Up Front Mortgage Insurance Premium, which is financed into the new loan amount, is 1% or $4,000. So the final loan amount would be $404,000.
FHA must really be hurting, because the mortgage insurance cost has really gone up over the last few years! However, FHA is the only game in town for low down payment loans, that accepts lower credit scores (as low as 620-640, depending on some other variables), will allow the entire down payment and closing costs to come from gift funds, and the seller is allowed to pay all of the closing costs. That is a very liberal loan! And these days, you have to pay for liberal.