FHA announced today that effective on January 27, 2017, the FHA Monthly Insurance Premium (MIP) Will Be Reduced To .55/.60. MIP factors for LTV's 95% or less will be reduced to .55, and the MIP factors for LTV's greater than 95.01% will be reduced to .60. This is very encouraging news in the continuing effort to achieve a full Housing Market recovery. This reduction in the MIP is also only the 3rd time in the history of the FHA they have reduced the MIP.
Below is a chart with the new MIP factors based on loan size, and Loan-To-Value (LTV).
The reduction of the MIP is a major step in the right direction by FHA to make home ownership, and achieving the American Dream a possibility for many again. Yes FHA has still retained the life time provision on the MIP for loans with an LTV of 95.01% or higher, but by reducing the MIP by .25 Bases Points (BPS), FHA has made the MIP far less than the PMI on conventional loans with the same LTV and credit score.
By reducing the MIP factors to .55/.60 FHA should once again become a go to loan product, especially for first time homebuyers. Hopefully this is a sign FHA will be considering further changes in the near future.
Curtesy of George Souto
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