The Federal Housing Administration announced that it will raise premiums by 10 basis points, or 0.1%, on most of the new mortgages it insures. A 30-year, fixed-rate mortgage with 5% or more down will now require an annual insurance premium of 1.3% of the outstanding balance. A mortgage with less than 5% down will require a premium of 1.35%.
The FHA also said it will raise premiums for jumbo loans, loans of $625,000 or more, by 5 basis points, or 0.05%, and increase the minimum down payment requirement on these loans to 5% from 3.5%.
The FHA will require mortgages with a loan to value greater than 90% to have insurance for the life of the loan or 30 years. FHA loans with a loan to value less than 90% will require mortgage insurance for 11 years. In 2001 the FHA allowed borrowers to cancel mortgage insurance once their debt fell below 78% of the original balance.
Last spring, the FHA increased both premiums and upfront costs on mortgages.