FHA raises their Mortgage Insurance Premium in Louisville KY
Home buyers using FHA backed loans in Louisville KY saw a change in the annual mortgage premium payment this week. Up until April 18th, the annual premium was .90% for LTV (Loan To Value) of 95% or higher. It has now increased to 1.15%.
FHA loans are still very attractive as they have one of the lowest minimum down payments required asking for only 3.5%. This is a far cry from other lenders looking for 20% down.
Let’s use a $200,000 home purchase as an example. We will figure the normal amount of 3.5% down payment ($7,000). At the old rate of .90%, we would pay monthly mortgage insurance of $150 per month. At the newer increased rate of 1.15%, our monthly bill increases to $191 per month. That is $41 per month or nearly $500 per year. That will buy a lot of groceries.
For a couple with a borderline debt to income ratio, this increased rate may make them become ineligible for the home of their dreams.
To try several “what if” scenarios for Louisville Home loans, try the mortgage calculator and plug in different purchase price amounts.
For more on this subject, see your Louisville mortgage broker, or contact us.