Higher FHA Mortgage Payments For Kansas City Home Buyers Now In Effect

Checking The Pulse Of The Kansas City Real Estate Market

The FHA changes we discussed back in February went into effect this week. This means higher mortgage insurance premiums on all FHA loans. For example, Rick Woodruff with Metropolitan Mortgage explains this means a $33 higher monthly mortgage payment on a $163,000 home (with a 3.5% down payment). A Mortgage Insurance Premium (MIP) is the equivalent of Private Mortgage Insurance (PMI) seen on a typical conventional 15-year or 30-year fixed rate mortgage, where the borrower has less than 20% down payment (less than 20% equity in the home).

More than half of loans being provided today are FHA loans, so mortgage payments just got more expensive more a lot of potential home buyers. The increased fee is necessary to replenish the FHA’s cash reserves – so they can keep the FHA program afloat – and to meet the 2% minimum cash reserves that Congress mandates they have in cash on hand. This change only affects loans where the buyer goes under contract after today’s date. All buyers who went under contract yesterday or earlier and/or who already have a FHA loan in effect are unaffected by this change.