FHA Mortgage Insurance

FHA mortgage insurance is a required form of protection for all HUD lenders.  This type of insurance protects lending institutions against financial losses that are a result of home owners defaulting on their home loans.  In most cases this type of mortgage insurance is required for all home loans in which the burrower pays less than a 20% down payment. 

President Obama signs 2010 HUD/FHA Bill         

In august of 2010, President Obama signed a bill that gave HUD the flexibility to increase mortgage insurance premiums.  These changes were made effective in April of 2011. 

What does this mean to you as a burrower?  If your loan is for greater than 15 years your insurance depends on your loan down payment.  Your new annual premium is 110 basis points or bps if your down payment is equal to or greater than 5%.  If your down payment is less than 5%, your new annual premium will be 115 basis points.

For loans less than 15 years, your new amount depends upon your home loan down payment.  If you put more than 10% down, your new mortgage insurance premium will be 25 basis points.  If your down payment is less than 10%, your new premium will be 50 basis points.

Upfront Home Mortgage Insurance Premiums

Home loans that have been approved since 2010 qualify for FHA regular mortgage insurance premiums and refinance products which have an upfront premium of 1% which is down form the previous 1.5%.  Your FHA monthly home mortgage insurance payments will be automatically ended when the following conditions apply:

1)  For home mortgages with finance terms of 15 years or fewer and with loan to value ratios 90% and higher, your annual premiums will be terminated when your loan value reaches 78%.

2)  For home mortgages with finance terms more than 15 years, your annual mortgage insurance premiums will be terminated when the loan to value ratio reaches 78%, assuming the mortgage payee has paid the premium for at least 5 years.

3)  For mortgages with finance terms 15 years or fewer, with loan to value ratios of 90% and less, the borrower will not be charged annual mortgage insurance premiums.

Can you get Mortgage Insurance Refunds from FHA?

Previously, FHA paid our refunds for upfront mortgage insurance premiums under specific circumstances but ended the practice under the Bush Administration.  However, there are some exceptions that apply now. 

If you secured your mortgage insurance before December of 2008, and are an FHA home loan holder you may be eligible.  If you paid upfront mortgage insurance premiums as part of your home loan closing costs and you did not default on your FHA home loan there are options.  FHA home loan holders are still entitled to a complete refund of their upfront mortgage insurance premiums but only if you refinance to another mortgage insured by FHA. 

Be careful.  Many internet scams are prevalent and you may receive an email that states that you are entitled to a large refund by FHA.  They claim that you are only entitled to a refund if you refinance your home loan or if you pay their company a fee to secure your FHA mortgage insurance premium refund.  This is false and not true.  Do not trust an email from a third party.  Instead, contact HUD directly by using this hotline telephone number: 1-800-697-6967.