Obama's MIP Reduction for 2017 Reversed by Incoming Trump Administration
FHA Homeowners Can Still Save an Average of $900 Annually From the 2015 Reduction. Further Estimated Reduction of $500 Suspended.
On January 9, 2017, the Federal Housing Administration operating under the Obama administration announced a further reduction in the FHA loan annual mortgage insurance premiums (MIP) for new loans. The change would affect most Title II FHA mortgage loans with a closing/disbursement date on or after January 27, 2017. Excluded were loans made for properties in the Hawaiian Homelands.
These new MIP rates would have reduced the annual premiums by a quarter of one percentage point, bringing them in line with what rates were prior to pre-housing crisis levels of 2008. This is referred to by many as the "collapse of the housing market." Homebuyers financing their homes with an FHA government-backed loan could have saved an additional $500 per year based on an average $200,000 mortgage with a term of at least 11 years.
Less than two weeks later in the first hour of Trump's presidency, the incoming administration suspended the rate reduction with its first executive action. The suspension of the 0.25 percentage point premium rate cut happened before the reduction had even taken effect.
Since FHA loans have a minimum down payment rate set as low as 3.5 percent, it is compulsory that borrowers pay the MIP. When someone purchases a home with an FHA mortgage, part of their mortgage payment includes a required annual mortgage insurance premium (MIP). The amount of the annual MIP is based on the loan-to-value ratio, base loan amount, and the term of the mortgage.
Loans backed by FHA are popular because the FICO score requirement of 580 is lower than what is required for conventional mortgages and the down payment can be as low as 3.5%. Buyers must still demonstrate their ability to qualify for a mortgage and pay it back on time.
See also: Current Mortgage Insurance Premium (MIP) Rates
SEE YOUR CREDIT SCORES From All 3 Bureaus
Do you know what's on your credit report?
Learn what your score means.
FHA Loan Articles and Mortgage News
July 7, 2020 - Do you know what your credit report says about you at this moment? If not, you aren’t truly prepared for your home loan application. Those who have not pulled their credit reports should not fill out loan paperwork.
July 6, 2020 - How much do you know about home loan limits and how they work? If you are shopping for a home to buy, an FHA mortgage can help with its lower down payment requirements and more forgiving FICO score requirements.
July 4, 2020 - In the earliest part of 2020, mortgage loan interest rates experienced a great deal of volatility. Unprecedented low mortgage rates have grabbed headlines and have sparked a flood of refinance loan applications and many renters are seriously considering becoming homeowners.
June 24, 2020 - Did you know that the VA offers a One-Time Close construction loan similar to the FHA One-Time Close loan? The VA version of the One-Time Close loan allows qualified borrowers to finance both the construction and the permanent mortgage at the same time.
June 23, 2020 - Credit approval for big loans like a mortgage isn’t dependent just on FICO scores.. Home loan approval depends on a number of factors that are reviewed by your lender after you submit a loan application. One factor is your employment history.
