Effective April 1, 2013 the Federal Housing Administration’s (FHA) will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent. This increase will bring the mortgage insurance rate to 1.35 percent. Additionally, FHA will now require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan. In other words, borrowers can no longer eliminate their MIP once their loan’s principal balance reaches a certain point.
These changes are part of an effort to strengthen FHA’s Mutual Mortgage Insurance Fund. See the HUD press release here: FHA TAKES ADDITIONAL STEPS TO BOLSTER CAPITAL RESERVES