It was announced last month that FHA monthly mortgage insurance premiums will be lowered by 50 basis points! What does this mean? It means people who buy a home using an FHA loan will have a lower mortgage payment than originally expected.
What is an FHA loan and why should I care?
Well, FHA loans are really popular with first-time homebuyers because it allows them to have a very low down payment; 3.5% of the total purchase price to be exact. However, keep in mind that a lower down payment means a higher loan amount, which means a higher mortgage payment (compared to putting more down).
Also keep in mind that while it's great that you can put minimal down & still qualify, FHA charges a "funding fee" which is 1.75% of the loan amount. Think about this fee as a premium charge for using the program, or the cost of being able to put minimal amount down. The good news is that it's rolled into your loan, so it's not added onto closing costs, like a down payment would be.
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