2013 Changes to FHA's Annual MIP

To combat the dwindling reserve, FHA has made some important changes to FHA that you need to be aware of.

MIP Increase

Increased annual MIP rates are effective for case numbers assigned on or after April 1, 2013. The increases in the annual MIP apply to all mortgages insured under FHA's Single Family Mortgage Insurance Programs except:

• Streamline refinance transactions of existing FHA loans that were endorsed on or before May 31, 2009
• Title I
• Home Equity Conversion Mortgages (HECM)
• Section 247 (Hawaiian Homelands)
• Section 248 (Indian Reservations)

MIP Cancellation

For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. The changes to the duration of the annual MIP are effective for all Single Family FHA programs for which FHA charges an annual MIP except:

• Title I
• Home Equity Conversion Mortgages (HECM)

This means that the previous rule of being able to cancel your MIP after 5 years if your Loan to Value drops below 78% no longer applies. While this is unfortunate, FHA still remains the best option for most borrower looking for a flexible loan with minimal down payment.

You can find the HUD letter on the policy changes here:  http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf