Housing and Urban Development Secretary Marcia L. Fudge announced that mortgage insurance on Federal Housing Administration loans will remain the same for the foreseeable future.
“Given the current FHA delinquency crisis and our duty to manage risks and the overall health of the fund, we have no near-term plans to change FHA’s mortgage insurance premium pricing,” HUD Secretary Marcia L. Fudge said. “We will continue to rigorously evaluate our strategy and work transparently with Congress. Our number one priority is helping families keep their homes and remain safe as we work toward an equitable recovery.”
What is FHA mortgage insurance? Bankrate explains:
All FHA loans require the borrower to pay two mortgage insurance premiums: Upfront mortgage insurance premium: 1.75 percent of the loan amount, paid when the borrower gets the loan. The premium can be rolled into the financed loan amount.
Annual mortgage insurance premium: 0.45 percent to 1.05 percent, depending on the loan term (15 years vs. 30 years), the loan amount and the initial loan-to-value ratio, or LTV. This premium amount is divided by 12 and paid monthly.
So, if you borrow $150,000, your upfront mortgage insurance premium would be $2,625 and your annual premium would range from $675 ($56.25 per month) to $1,575 ($131.25 per month), depending on the term.
The Mortgage Bankers Association praised the announcement.
“MBA commends Secretary Fudge for maintaining FHA’s current mortgage insurance premium pricing until we have a clearer picture of the long-term impact of the pandemic on FHA borrowers and the insurance fund,” MBA President and CEO Bob Broeksmit said. “While it is desirable to have lower mortgage financing costs, particularly as rates rise and home prices continue to increase, we agree with HUD that we need more data about how the more than 1 million FHA loans that are delinquent perform as they exit COVID-19-related forbearance.
“We look forward to continuing to work with Secretary Fudge on ways to protect FHA borrowers and ensure the overall stability of the FHA program.”