New FHA Changes To MIP Effective June 3rd…

With it’s Mortgagee Letter 2013-04 HUD has made changes to their Mortgage Insurance Premium (MIP) that went into effect June 3rd, 2013.

It’s not good news, but here is the news…

HUD has removed the MIP exemption for loans with terms of 15 years or less and less than or equal to 78% loan to value ratio at origination.

So, in other words if you were getting a 15 year FHA mortgage with less than 78% your MIP used to be zero, and now it’s .45% of the loan amount annually.

The other change from this mortgagee letter is that HUD has revised the period for assessing their annual MIP.

The chart below shows these changes…

	LOAN TERMS > 15 YEARS
LTV	Previous	New
< 78 %	5 years	11 Years
> 78 ? 90%	Cancelled at 78% LTV or 5 Years	11 Years
> 90%	Cancelled at 78% LTV or 5 Years	Loan Term

These changes will reduce the appeal of FHA loans for many people. …rightfully so.

Call me or email me if you have questions about this.

That’s it for today!