FHA Mortgage Insurance Increase is Now in Effect

The Mortgage Insurance Premium has increased in order to help repair the FHA's emergency fund.


Starting today, the Mortgage Insurance Premium for the FHA loan has increased to 10 points annually, or 0.10 percent points, according to the Federal Housing Administration.

The administration is also reversing their policy which allows FHA homeowners to cancel their mortgage insurance premiums once the principal of the loan reaches 78 percent of the original balance.

These changes are being implemented in order to help replenish the administration's emergency fund.

"After careful analysis of the market and the health of the MMI [Mutual Mortgage Insurance] fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market," Carol Galante, Mortgage Bankers Association said. "These modest increases are one of several measures we are taking towards meeting the congressionally mandated 2 percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers."

The changes will help boost the fund by $1 billion, according to the FHA.

FHA mortgages are given to first time home buyers who are able to put down at least 3.5 percent for a home. 

With these changes, if someone were to buy a house at $250,000, this new policy will create a $20 increase per month.


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