No Fooling: FHA MI going up again April 1

HUD has announced that effective on FHA case numbers obtained on or after April 1, 2012, FHA mortgage insurance premiums will be higher.

Upfront Mortgage Insurance Premium (UFMIP) will be increased on all FHA loans from 1.00% of the loan amount to 1.75%. Most borrowers opt to add this cost to their loan amounts as FHA will allow this cost to be financed.  Homeowners who elect to take advantage of an FHA streamlined refi may receive a portion of the upfront mortgage insurance premium credited back towards the refi closing cost.

UPDATE:  FHA will have REDUCED mortgage insurance premiums for streamlined refi’s IF the FHA mortgage that is being refinanced was “endorsed” by HUD prior to June 1, 2009.  Click here for more info.

The annual mortgage insurance premium will be increasing an additional 0.10% and for those borrowers with a “high balance” FHA loan will see their premiums go up an additional 0.25% (for a total increase of 0.35%) on June 1, 2012.

The annual mortgage insurance premium is part of an FHA borrower’s monthly mortgage payment and remains with the loan for a minimum of 60 payments AND 78% loan to value is reached.

On a $417,000 loan amount, the difference in payment is around $48 and on a high balance $567,500 loan amount, the difference in payment is about $184.

If you are considering an FHA mortgage, whether it’s for a refinance or purchase, and you have the ability to start the loan process in March and obtain your FHA case number, I highly recommend contacting a local mortgage professional (I’m licensed only for homes located in Washington state) and see what your options are.

UPDATE MARCH 6, 2012:  HUD has just announced that there will be reduced mortgage insurance rates for FHA streamlined refinances where the FHA loan that is being refi’d was originated prior to June 1, 2009.  A mortgagee letter will follow with more details.

This entry was posted in Industry Talk by Rhonda Porter. Bookmark the permalink.

About Rhonda Porter

Rhonda Porter is an NMLS Licensed Mortgage Originator MLO121324 for homes located in Washington state. Her blog, The Mortgage Porter, is nationally recognized for sharing relevant information to consumers about mortgages. She has been originating mortgages since 2000 at Mortgage Master Service Corporation #40445 Consumer NMLS Website: NMLS ID 40445. Equal Housing Opportunity. You can follow Rhonda on @mortgageporter, Facebook and/or Google+

54 thoughts on “No Fooling: FHA MI going up again April 1

  1. Thanks for the info, Rhonda. I’m a little confused as you said the “up front” MIP was going up, but the example shows the monthly payment going up. Is the monthly MIP going up? Or is that the difference in payment based on the higher MIP being financed?

  2. Hi Ardell. Both are going up. Monthly = annual. The estimates used are based on financing the upfront mortgage insurance premium and the increase in the annual mortgage insurance combined.

  3. Thank you Rhonda. How will this affect to FHA case number that was created prior to April 1st but transfers to different lender after April 1st?

  4. Hi Dan, we need the official “mortgagee letter” from HUD. From HUD’s announcement, it’s based on Case #’s so my assumption would be that the mi rate would follow the case #. We should have confirmation soon.

  5. Dan (and any borrower or real estate agent involved with an FHA transaction) make sure you obtain your actual case number from your mortgage originator. Having a loan application by April 1 does not the same as having an assigned FHA number. If you have an appraisal with your FHA transaction, you should have a case number…but I would still get the actual number from your lender.

    • Thanks for the update Rhonda. Has HUD sent the letter regarding transferring the case to a different lender after April 1st?

      Thank you.

  6. Not as of this morning, Dan. They did issue an mortgagee letter on tightening underwriting guidelines – but not the MI changes. I’ll comment here when that mortgagee letter is issued.

  7. I did a blog post about this recently. This 1% insurance premium increase in FHA loans was done to cover the revenue shortfall caused by the social security payroll tax cut. Also, as you’ve pointed out, this increase will not affect those who have already taken out FHA loans, but only new applicants from April 1, 2012 onwards.

    • Thank you Rhonda. I read the letter and it didn’t mention about the transferring the case # but it seems I should be ok long as the case # was generated prior to April 2011.

    • The original announcement stated “originated” which I thought was vague (mentioned it in my post at MP) that I didn’t know how HUD would determine that date – is it the date of the application or ?

      Anyhow, the mortgagee letter came out saying effective date is when the mortgage was “endorsed” by HUD for insurance…which can be a couple months AFTER closing.

      It’s too bad HUD didn’t make this based on the closing date… something all borrowers could easily find on their own.

  8. I also got wind that FHA was caping the collections on buyers, and any buyer that has a collection over $1000 – has to pay the collection and or set up payment arrangments?

    I can’t find the mortgagee letter?

    Have you heard?


  9. Hi Rhonda. At the end of February I streamlined an FHA loan that had closed in 2008. The loan would have been eligible for the reduced rates but as it were, I spent about 6K in upfront MIP with monthly costs of around $600. Had I waited a few months, I would have saved around $5400 and $300/month.

    I’m certain there are many (infuriated) folks like me who fall into the same category. Do you have any idea if HUD will address folks in this situation?

  10. Thanks. I know there was plenty of awareness that rates would increase in April but was there any talk of the reductions? Or did this just come out of nowhere? Thanks again!

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