FHA Mortgage Insurance Premiums
FHA Mortgage Insurance Premiums are collected both up-front and as a monthly premium as part of your payment. The fees collected go into a pool of funds designed to back all FHA Mortgages so that lenders are compensated if their customers go into default.
There are rumors that FHA Mortgage Insurance Premiums will be going up in the near future (this page is being written in March, 2010). The reason for the rumored increase is that the FHA Reserves are dwidling as FHA now insures over 20% of all mortgages originated nationwide, up from single-digits a couple years ago. With home values falling in many areas, and jobs scarce, more FHA foreclosures have also followed, tapping into FHA's reserve pool.
For an FHA Home Purchase, FHA Mortgage Insurance Premiums are now at 1.75% of the loan amount as an up-front mortgage insurance premium, commonly financed into the loan, and a .55% monthly rate, which is part of the monthly payment (.55% x loan amount / 12 months).
For an FHA Refinance, the premiums are the same as a purchase. However, on an FHA Streamline Refinance, the monthly amount is .5%, and part of the up-front MIP will be offset by a refund of your original MIP, if you are refinancing within 3 years of obtaining your old FHA Mortgage.
To get started with your FHA Mortgage, simply select the scenario that best suits your needs:
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