Increase to FHA Monthly Mortgage Insurance Premium
Prior to October 4, 2010, the Monthly Mortgage Insurance Premium was based on a factor of .55% of the loan amount divided by 12 (if the loan to value was over 95%). As of October 4, the factor is now .9%. As an example, on a $400,000 mortgage, using the old factor of .55%, the Monthly Mortgage Insurance would have been $183. ($400.000 x .0055 / 12 = $183). Now, using .9%, the Monthly Mortgage Insurance is $300. The nice thing is there are some benefits to the changes in mortgage insurance the Upfront Insurance premium has decreased.
FHA Upfront Mortgage Insurance Premium Decreased
The Upfront Mortgage Insurance Premium (UFMIP) used to be 2.25%. But on October 4, 2010, they dropped it to only 1%. Using the same base loan amount of $400,000 and using 2.25%, $9,000 would have been added to the Idaho home buyers loan. The payment would have been based on a total loan of $409,000. Now, using only 1% for the UFMIP factor, the total loan is only $404,000.
FHA Still Best Option for Idaho First Time Home Buyers
FHA is still the best option for Idaho first time home buyers. While Conventional Fannie Mae and Freddie Mac guidelines continue to be very tight for low down payment home buyers, it is still fairly flexible. It will allow higher debt to income ratios, lower FICO score, and also has more of a “makes sense” underwriting philosophy. While it allows as little as 3.5% down payment, some Idaho home buyers with 10%, 15% and even 20% down payment are finding FHA to be the best choice.
If you are wondering if an FHA mortgage is the right choice for you in purchasing or refinancing your home feel free to contact us. We can answer any questions you may have.