FHA Lowers Yearly Mortgage Insurance Premium

The FHA has just announced that it will be lowering the yearly Mortgage Insurance Premium later this month. Currently the Yearly Premium is 1.35%, but the new Premium will be 1/2 of a percent (0.5%) lower at 0.85%. In the wake of the 2008 “Financial / Housing Meltdown” in the U.S., the Federal Housing Administration (FHA) played an important role for Homeowners. FHA Insured Financing allowed Borrowers to buy a Home with Down Payments as low as 3.5% and in addition was more forgiving regarding Credit Scores and other qualifying criteria. Because the FHA was Insuring the Loan, it was also the case that the Interest Rates available for FHA Loans were lower than what was available through Conventional Financing. In exchange for all of these benefits, the Borrower paid “Mortgage Insurance” in the form of both an “upfront” and ongoing “yearly” Premium.