Breaking News: The Monthly PMI Gets Reduced on FHA Mortgages

The big announcement regarding the FHA Mortgage is the Annual Fee cost decreased a half a point.

FHA has two types of PMI.

  1. The first type is upfront – that gets added to your loan balance – that is not changing.
  2. The second type is monthly – for which the appropriate mortgage term is called annual – which is changing.

I am going to discuss how the change affects the most popular FHA loan option – 30 year fixed with 3.5% down payment.

With a larger down payment or a shorter term the annual fee is less.

Prior to the announcement, the annual fee was 1.35% and will decrease to .85%. The fee is the percent of the total loan amount.

The way the annual fee is calculated on a monthly basis is you take the annual fee and divide by 12. On a 100,000 loan the monthly cost was 112.50. After the announcement, the cost is 70.83 – so you save about $42 dollars for every 100,000 borrowed.

Most importantly, before you get too excited, please remember the annual fee never goes away – even when you have 20%.

If you have any questions please call me directly 617 529 9317.

Phil Ganz (117 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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