FHA has increased Upfront Mortgage Insurance Premiums (“UFMIP”) for most FHA programs to 2.25 percent. Purchase money and full credit qualifying refinance transactions have increased from 1.75 percent to 2.25 percent. Streamline refinances, with or without an appraisal, have increased from 1.50 percent to 2.25 percent.
The UFMIP for the H4H program will remain at 2.00 percent and the UFMIP for HECM (reverse mortgages) will also remain at 2.00 percent. In addition, UFMIP for Title I, Section 247, Section 248, Section 223(e) and Section 238(c) programs have not changed.
At this point in time, there are no changes to the annual mortgage insurance premium (“MIP”). FHA reserves the right to make changes, but it will require legislative action. The annual premiums, which are remitted on a monthly basis, are a factor of the loan term and loan-to-value ratio. For now, these factors continue to be:
Terms > 15 years
LTV > 95% 0.55%
LTV < 95% 0.50%
Terms < 15 years
LTV > 90% 0.25%
LTV < 90% None
How does it change or benefit the industry:
The UFMIP 50 basis points increase for full credit qualifying transactions and the 75basis points increase for streamline refinance transactions will have an immediate impact on improving FHA’s capital reserve funds, which dipped below the two percent threshold at the end of the last fiscal year. FHA says it intends to seek legislative authority to increase the annual MIP. If this authority is granted, FHA may consider shifting some of the UFMIP premium increase to the annual MIP.