FHA announced some new changes in regards to monthly Mortgage Insurance Premium (MIP) also more commonly known as PMI. Monthly insurance is currently canceled once the homeowner has been living in the home for 5 years and reached a loan to value of 78% or less. The new FHA MIP changes basically require the mortgage insurance to paid for the life of the loan if the homeowner is doing a 30 year fix term with less than 10% down payment. Some changes as well for homeowners doing a 15 year fix term as they are no longer exempt from MIP in some cases. FL Homebuyers thinking about getting an FHA home loan soon pay close attention to these changes that begin 4/1/2013.
- Annual MIP Increase – Changes affective for all FHA Case #’s assigned on or after April 1, 2013
- Removal of Annual MIP at 78% – Changes effective for all FHA Case #’s assigned on or after June 3, 2013
The purpose of the mortgagee letter:
- revising the period for assessing the annual MIP;
- removing the exemption from the annual MIP for loans with terms of 15
- years or less and Loan to Value (LTV) ratios of less than or equal to 78
- percent at origination; and
- increasing the annual MIP on all forward mortgages except single family
- forward streamline refinance transactions that refinance existing FHA
- loans that were endorsed on or before May 31, 2009 (see ML 2012-4).
The table below shows the previous and the new duration of annual MIP by
amortization term and LTV ratio at origination.
Term | LTV (%) | Previous | New |
≤ 15 yrs | ≤ 78 | No annual MIP | 11 years |
≤ 15 yrs | > 78 – 90.00 | Cancelled at 78% LTV | 11 years |
≤ 15 yrs | > 90.00 | Cancelled at 78% LTV | Loan term |
> 15 yrs | ≤ 78 | 5 years | 11 years |
> 15 yrs | > 78 – 90.00 | Cancelled at 78% LTV & 5 yrs | 11 years |
> 15 yrs | > 90.00 | Cancelled at 78% LTV & 5 yrs | Loan term |
The table shows the previous and the new annual MIP rates by
amortization term, base loan amount and LTV ratio. All MIPs in this table
are effective for case numbers assigned on or after April 1, 2013.
Term > 15 Years
Base Loan Amt. | LTV | Previous MIP | New MIP | |
≤ $625,500 | ≤ 95.00% | 120 bps | 130 bps | |
≤ $625,500 | > 95.00% | 125 bps | 135 bps | |
> $625,500 | ≤ 95.00% | 145 bps | 150 bps | |
> $625,500 | > 95.00% | 150 bps | 155 bps | |
Term ≤ 15 Years
Base Loan Amt. | LTV | Previous MIP | New MIP |
≤ $625,500 | 78.01% – 90.00% | 35 bps | 45 bps |
≤ $625,500 | > 90.00% | 60 bps | 70 bps |
> $625,500 | 78.01% – 90.00% | 60 bps | 70 bps |
> $625,500 > | > 90.00% | 85 bps | 95 bps |
FHA Mortgage Source is Florida’s leading FHA loan resource, serving you 7 days a week. Please call us at ph: 800-743-7556 or submit the quick Info Request Form on the right side of this page. Mobile users will find the Info Request Form here.