FHA Annual Mortgage Insurance Premiums Set To Increase

Starting April 18th any new FHA loans (whose FHA case numbers are assigned this date or later) will see a 25 basis point increase in the Annual Mortgage Insurance Premium. A basis point is 1/100th of a percentage point - so this will raise the mortgage insurance premium by one quarter or one percent.

This isn't a substantial increase but borrowers will see higher mortgage payments as a result. In Mortgagee Letter 11-10 dated February 14, 2011, The Department of Housing and Urban Development (HUD) identified as the reason for the increase a need to "strengthen the capital position of the MMIF (Mutual Mortgage Insurance Fund)."

How much more will borrowers taking out FHA loans pay? It depends on the amount of the loan. One quarter of 1% of a $200,000 loan is $500. Divide that into 12 monthly payments and it amounts to about a $42 per month payment increase.