Posted: 02/10/2017

A lot of headlines came out of Washington, D.C. recently about mortgage insurance rates.

The news is that a mortgage insurance rate cut on loans authorized by the Federal Housing Administration (FHA), which was scheduled to go into effect at the end of January, has been suspended.

It is unknown what the future of the rate cut on FHA loans holds, but here are some numbers that may interest you – especially if you’ve decided to purchase a home later this year.

Any prospective homebuyer who applies for an FHA loan today will have to pay the same premium insurance rate that’s held since 2015 (see below).

Here is how the rate breaks down, according to the Chicago Tribune:

● Most borrowers pay an upfront insurance fee (be sure to ask your lender about this).
● Borrowers may pay 0.85 percent of the loan amount for premiums each year.
● The proposed rate would have dropped rate to 0.60 percent (this is the rate that was suspended).
● In 2014, the rate was 1.35 percent.

Many of the characteristics that define an FHA loan remain in tact. Here are the characteristics of an FHA loan:

• Low down payment, typically a minimum of 3.5 percent; which is great for first-time home buyers
• Higher loan limits allow homebuyers to buy higher-priced homes with less down payment
• Borrowers must live in the home as the primary residence
• Requires a home appraisal by an FHA-approved appraiser*
• Requires borrowers to pay mortgage insurance premiums*
• Flip properties are allowed
• Credit scores to 640, flexible debt ratios, and seller contributions permitted

FHA loans are compelling for first-time buyers, and those who want a second chance at home ownership may take a good look at a FHA loan as well. For more information about FHA loans, click here.

*Note: As of June 2012, the FHA launched its Streamline Finance program, which does not require an appraisal and offers significantly lowered mortgage insurance costs for borrowers who qualify.

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation. For more information please visit our Disclosures page: