FHA has lowered the annual Private Mortgage Insurance (PMI) by 25 percent.
The high cost of Private Mortgage Insurance (PMI) has unfortunately put homeownership out of reach for many first-time home buyers. This program will help to get these buyers back on the right road.
What this means to home buyers who were considering using FHA financing is that not only does the program offers only 3.5 percent down, the new annual mortgage premium can save the borrower hundreds of dollars a year. This will also help lower the debt-to-income ratio that the buyer/borrower needs to qualify for the mortgage.
Increase In Buying Power
The other door it will open is that it will help increase the buyer’s buying power. With home prices continually going up, some homes are becoming out of reach for buyers. With this new annual private mortgage insurance on a $225,000 home with 3.5% down the monthly cost for the PMI is $144.75. With the new premium the monthly cost is $99.52. A $45.23 savings may not sound like much, but this just increased the buyer’s buying power close to $10K. In most areas, a $10k difference in a home cost can be a big change.
Buyers who were right on the edge of qualifying, this can be a game changer for them, allowing them to enter into the home buying market.
Don’t Overlook FHA
FHA mortgage products are here to serve an important part in the home buying process, providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional loan programs. Lower credit scores and lower incomes are more acceptable through FHA financing.
Mortgage programs are continually to become more relaxed and affordable for borrowers and home buyers. Want to see what mortgage program is right for you?