FHA Mortgage Premium Drops

Mortgage Payments for a FHA Loan Will be Lower
January 12, 2017

UPDATE: This was rolled back on January 20, 2017 so the change will not take place. FHA MIP premiums will stay the same for now.  I will post if something changes.

Starting with new loans on 1/26/17, the MIP portion of a mortgage payment will be lower.  How much?  For a $100,000 purchase price – the MIP will be $45.00 instead of $64.00.  You save $19.00!  What can you do with that $19.00?  You get to 1) put it in your pocket each month 2) invest it or 3) buy $4,000 more home for the same payment!  If your price range is more like $200,000 – you can buy $8,000 more home FOR THE SAME PAYMENT! That will make a difference!

If you would like to know whether FHA is the best type of loan for you or how much you could be pre-approved for, please
contact me and I will connect you with a good lender.

What is MIP?

When you get a mortgage, if you have less than 20% down you pay an insurance premium that insures against default.  For conventional loans - 5% down (but less than 20% down) that is called PMI (Private Mortgage Insurance)  For FHA loans – 3 1/2% down it is called MIP (Mortgage Insurance Premium) 

FHA charges some of the MIP at the time of closing and the rest annually.  The premium is affected by the number of defaults nationally and stability of home values.  It was just announced that the annual MIP – the part that effects your mortgage payment - is being reduced for loans initiated after 1/26/17 is dropping.

For the past 2 years the annual premium was 0.85% annual MIP plus 1.75% upfront MIP.  The new annual rate is 0.6%.  That is where the monthly savings come in.

Want to see the history of FHA MIP?

  • Prior to January 2008 : 0.50% annual MIP plus 1.50% upfront MIP
  • October 2008 : 0.55% annual MIP plus 1.75% upfront MIP
  • April 2010 : 0.55% annual MIP plus 2.25% upfront MIP
  • October 2010 : 0.90% annual MIP plus 1.00% upfront MIP
  • April 2011 : 1.15% annual MIP plus 1.00% upfront MIP
  • April 2012 : 1.25% annual MIP plus 1.75% upfront MIP
  • April 2013  : 1.35% annual MIP plus 1.75% upfront MIP
  • January 2015 : 0.85% annual MIP plus 1.75% upfront MIP
  • January 2017:  0.60% annual MIP plus 1.75% upfront MIP


This is good news for buyers using FHA – and sellers because it increases affordability.

If you know someone with an older FHA loan – it might make sense to look at a refinance to lower the payment and reduce or get rid of the premium. ​