There are some significant changes that are being made to FHA financing that will impact borrower’s monthly payment. FHA changed the upfront mortgage insurance premium and the monthly premium on October 4th 2010. The changes at that time impacted people buying a new home or refinancing an existing loan. At the time the upfront premium was be dropped to 1.0% of the mortgage amount from the previous 2.25% and the monthly premium increased to .90% of the mortgage amount from the previous .55%.
FHA is changing the monthly premium again with applications dated on or after April 18th, 2011. The change will increase the premium by .25% of the loan amount for all FHA loans including 15 year mortgages.
It is still a great program and considering that the program only requires a 3.5% down payment, it is an attractive option for those that are looking to buy a new home or refinance their current mortgage. The program has much more relaxed credit requirements when compared to conventional options as well.
Sr. Mortgage Consultant
5001 American Blvd
Bloomington, MN 55437