Effective on FHA insured loans with case numbers assigned April 5, 2010 or later, the upfront mortgage insurance premium  (MIP) will increase.  Usually the FHA upfront MIP is financed, however it can be paid as a closing cost  (which is how the 2010 GFE discloses the premium). 

FHA insured mortgages for purchases and non-streamline refinances will increase from 1.75% of the base loan amount to 2.25% and streamlined FHA refinances (refinancing an FHA underlying mortgage) will increase from 1.5% to 2.25%.

The following changes should take place for FHA loans by early summer:

  • Seller contributions towards allowable closing costs reduced from 6% to 3%.
  • Increasing the down payment requirements for lower credit scores (risk based underwriting).   Buyers with a 580 score would need a minimum of 10% down payment.   The upfront MIP increase will go into effect just 25 days before a homes buyer needs to be “in contract” to qualify for the home buyer tax credit.

A delay in purchasing a home can cost you more money. If you are thinking of purchasing a home get to your mortgage lender today and get your financing in order.