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As of January 26, 2015, the premiums for insurance on Federal Housing Authority (FHA) mortgages will be reduced!

FHA loans allow you to put as little as 3.5% down when purchasing a home, but require an additional mortgage insurance with a premium (MIP) that can add hundreds of dollars to your monthly payment.

President Obama’s plan to cut this percentage paid may allow up to a quarter of a million more Americans to purchase homes. The loan percentage, in some cases (see the chart below), was 1.35% and will be reduced to 0.85%, saving about $900 annually for a typical home buyer, according to the FHA. These additional premiums are included when looking at a borrower’s “debt-to-income: ratio, and can knock some borrowers out of the housing market if their debt-to-income ratio exceeded 43 percent (i.e. you owe more than 43% of what you earn). Even a few dollar savings on the MIP could put a borrower under the 43% line.

If you would like more information on this good news or you would like me to connect you with an excellent lender to get started, please call/text 562.673.5335 or email me katielarson@kw.com and I’ll get you connected. I will also send you information on first time home buying, such as how to choose an agent and how to get started.