FHA Mortgage Insurance Premiums reduced by 30 basis points-what this means for consumers

For folks looking to purchase or refinance a home with the FHA Loan, the Federal Housing Administration has just announced a reduction to their private mortgage insurance premiums by 30 basis points. This is a step in the right direction to help drive home ownership. Here is what this means for your bottom line…

Presently on an FHA loan, the annual premium is 0.85%. So if you have a loan amount of say $300k the monthly PMI is present at $212 per month.

On March 20th, these changes get reduced by 2.55% earmarking a 30-basis point reduction in the annual paid mortgage insurance premium.
So using our example for $300k the new annual premium will be $137/month.

In this example, it lowers the payments for a borrower to $75 a month. Does this help? Absolutely, does and it helps drive homeownership for families looking to purchase homes in America today. However, this same goal could be accomplished by paying off a credit card that has a $75 per month payment on it or more for the same benefit than waiting for this change to potentially take place. However, that being said this does still provide a net tangible benefit to the borrower. A more opportunistic approach that could be beneficial to home loan borrowers going forward would be to look at maintaining a good credit score to the best of their ability, keeping their debts low, and best preparing themselves personally and financially for buying a home. This change does help people who are otherwise supportive of getting prequalified to buy a home.

If you are looking to buy get pre-qualified for a home loan, start by getting a free rate quote today.

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

Illustration of two houses side by side. The smaller orange house has a red “For Rent” sign in front, while the larger blue house sits beside it. The background features light clouds, trees, and grass, with bold black text above reading “Renting Out Your Current Home.

Should You Sell or Rent Out Your Current Home When Buying a New One?

Should You Sell Your Home or Keep It as a Rental? When you’re thinking about…

A modern two-story suburban home with blue-gray siding and white trim is shown at sunset, framed by a calm sky and soft lighting. Bold navy blue text over the image reads, “Here’s a Better Way to Think About It,” making it a visually inviting blog post header about real estate strategy.

Thinking of Lowballing Because the House Needs Work? Here’s the Reality.

Here’s a Better Way to Think About It If the home just hit the market—say…

Illustration of a renovated home vs. a home for sale as-is, with "VS." in the center.

Should You Renovate Before Selling Your Home or Sell As-Is?

Should You Sell Your Home As-Is or Fix It Up First? Let’s Break It Down…

Illustration of an orange two-story house next to a green dollar sign, a blue calculator, and stacked coins, with bold text above reading “Income is the key to home affordability,” symbolizing the role of income in determining home buying power.

Why Income Drives Buying Power More Than Credit or Cash

When it comes to buying a home, most people focus on credit scores and down…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!