FHA Changes effective October 4, 2010: What's it really mean to the average buyer?
The good: FHA has maintained a miniumum 3.5% down payment.
More Good:The up front mortgage insurance premium (ufmip) has been reduced from 2.25% of your loan amount down to 1%. This amount is not actually collected upfront, but rather financed back into your loan. The lower this is, the lower your final loan amount is.
The Bad: The monthly mortgage insurance, or annual premium as FHA calls them is going from .55% to .90% on all loans that are for 95% or more of the sale price/value, and from .50% to .85% for all loans less than 95% of the sales price/value. So this monthly premium is almost doubling.
Simply put, for a buyer purchasing a $100,000 home with an FHA loan…