On October 4th, FHA is set to reduce the upfront mortgage insurance premium from 2.5% to 1%.
This will reduce the amount of “equity” that is used up by rolling this charge into the loan. At the same time, there will be an increase in the monthly PMI (private mortgage insurance) for the 30 year fixed rate that is more in line with conventional MI while lowering the PMI and a 15 year loan by more than half.
Currently FHA is still keeping the minimum down payment required at 3.5% on a standard FHA loan. Interest rates on FHA loans continue to remain slightly lower than conventional rates at the same loan to value.
Thanks to Armando SanMiguel at Brand Mortgage.
The Ashton Real Estate Group of RE/MAX Advantage
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