FHA has to have enough money in their FHA PMI fund to pay out to the banks – and lately, with so many FHA Loans going into foreclosure, the fund has been tapped out.
The FHA PMI Rates for 2013 have gone up, but this is still a great program. Qualifying for a FHA Home Loan in North Carolina is much easier than with most programs.
The FHA down payment is only 3.5%, and that money can come from a gift, or the NCHFA 3% Grant program. If you have student loans that are in deferment, it’s MUCH easier to qualify with the FHA Home Loan program – because unlike USDA Home Loans, those deferred loans will not count in your debt to income qualifying ratios.
Additionally, FHA only makes you wait 2 years after most serious credit catastrophes – and they will allow us to qualify borrowers with minimum credit scores that are much lower than a Conventional or USDA Home Loan. In general, to obtain a FHA Home Loan in North Carolina you need to be sure you have 2 or 3 open lines of Credit ( a credit card, a car payment) and you need at least 12 months where you didn’t miss a payment, and you had no new “negative” stuff report on your credit report.
If you don’t have this, we generally suggest that folks open a Secured Credit Card – it’s one of the fastest ways to build up scores.
Initial FHA PMI Rate 2013 Calculations
The new FHA PMI Rates 2013 are charged in two separate premiums, similar to the USDA PMI Rate structure. There’s an upfront premium collected at closing. Generally the Up Front FHA PMI premium is financed into the loan. For a Borrower who is getting a 30 year mortgage, that is under the high cost limits (so anywhere in NC) and putting the minimum of 3.5% down – the rate for this initial FHA PMI Premium is 1.75%.
To calculate your initial (up front) FHA PMI Premium – take your Loan Amount and multiply it by the UFPMI rate - as we said, it will likely be 1.75%, for the first time home buyer who is putting the minimum down on a FHA Loan. Add that FHA PMI Dollar Figure to your loan amount. That’s what your principal and Insurance is going to be based upon. If you are not getting a 30 year mortgage, or you have an “unusual” situation, you can follow this chart to see if you are using the most current FHA PMI Rate for your calculations.
Example Initial FHA PMI Rate Calculations:
Home Sales price is $250,000. You put the minimum 3.5% (which in this case is $8,750) down payment on the home, leaving you a loan amount of $241,250. You multiply the loan amount by the up front FHA PMI Premium of 1.75% and you get $4221.87. If you are the typical FHA Home Buyer – you would elect to add that Initial FHA PMI premium to your loan, making your total loan amount $245,472 (we round up the pennies).
If you had gift funds, or cash on hand – instead of financing the upfront premium, you could pay it at closing. It’s never going to be refunded, so there’s a risk if you wanted to move 2 years later – you would have paid that $4200 (and change) for not much return? We had a borrower recently who knew this was going to be the house she lived in forever, because it was across the street from her folks, and she used Life Insurance money to pay the premium. It made sense to her.
Annual FHA PMI Rate 2013 Calculations
The second part of the FHA PMI Rate 2013 calculations is an annual charge. For most, the FHA PMI Rates 2013 will only be slightly higher than last year.
The annual FHA PMI Premium charges are broken into 12 monthly payments. The FHA PMI Rate for the Annual premium in 2013 is 1.35%. To calculate that – you would take your TOTAL Loan Amount (including your Upfront PMI) and multiply that by the Annual FHA PMI Rate of 1.35% (assuming again that you are the typical FHA Home Buyer getting a 30 year mortgage with the minimum down payment). Divide that Annual FHA PMI Premium amount by 12. You will have THAT amount added to your Principal and Interest Payment with loans that have case numbers pulled after the end of March 2013.
Example Annual FHA PMI Rate Calculations:
Let’s go back to the $250,000 home above. The Total Loan Amount, with the Up Front FHA PMI Premium is $245,472. We multiply our loan amount by 1.35% and come up with an Annual FHA PMI charge of $3313.87 (round up). We divide that by 12 monthly payments, and the amount we pay each month in FHA PMI is $276.16. This is added to your Principal and Interest, plus your homeowner’s insurance plus your taxes to create your total monthly housing payment.
This total housing payment, including the FHA PMI Monthly charge, is what is used for your debt to income ratios in qualifying for a FHA Loan.
How Long Do You Pay FHA PMI?
With the new FHA PMI Rates 2013 there were several other “Tweaks” to the FHA PMI Fund. Again, these changes (and there have been like 8 in the last 4 years) are due to the fact that the FHA Insurance fund has been tapped out so heavily due to foreclosures.
Because of that – FHA is no longer allowing FHA PMI to be cancelled if you make less than an 10% down payment. With loans made after June 1, 2013, for borrowers making less than a 10% down payment – the FHA PMI will be paid for as long as you have your mortgage – no matter how much equity you build with the home. In order to cancel it – you would need to refinance to another type of loan, or pay the mortgage off. For those who make at least an 10% down payment, the FHA PMI must be in place for at least 11 years.
Additionally, on this chart, you will note that the new effective annual FHA PMI rates for loans with a Loan To Value ratio of less than or equal to 78 percent and with terms of up to 15 years has gone to .45%. Previously, if you had that much equity and a low loan term – you didn’t have any FHA PMI charged.
If you have questions about purchasing a home in NC using a FHA Mortgage Loan, or if you have more questions about FHA PMI Rate 2013, please call Steve Thorne at 919-649-5058. We do many FHA loans in North Carolina, we offer today’s best mortgage interest rates, and we can help! We also encourage you to leave us questions below – we try to answer all of them, or connect with us on Facebook or Google Plus