FHA's Mortgage Insurance....
Whether you know it, love it, hate it, or never encountered it, FHA loans have mortgage insurance (that mortgage insurance is a factor in your debt to income ratio). Currently on an FHA loan you have a low down payment and reasonable mortgage insurance.. For example, if you were to put down 3.5% on a new fha mortgage and you were calculating the MI payment you would take your purchase price, lets use 100,000 to make things easy, and take away your down payment, 3500. That gives us 96,500, with FHA's current guidelines you calculate your MI payment by taking your base loan amount and multiply it by .0055, which gives you your annual obligation, divide it by 12 to get your monthly MI payment. In October this calculation is raised to .0090 of the loan amount, close to double!!!!!
Current calculation on 100k purchase price your monthly MI will be 44.23/mo
New calculation (October) on 100k purchase price your monthly MI will be 72.38/mo
Imagine this on a bigger loan amount!!
If you are on the borderline with your debt to income ratios, you better try to find a house before October 4th.Â
If you want to look on theÂ bright side, the upfront mortgage insurance premium that is financed into your loan (FHA's upfront fee).... is being lowered from 2.25% of your base loan amount to 1% of your loan amount.
Also, you can check out HUD's website and read the new mortgagee letter that has all the legalÂ jargon, click the link below!
If you need a more detailed explanation or want me to run examples for you, just shoot me an email or give me a call!