The U.S. Department of Housing and Urban Development just released a new statement that FHA’s annual mortgage insurance premiums (MIP) are going to increase by .25% across the board.  The change will be effective for FHA case numbers issued on and after April 18, 2011.

The press release can be read in full here, but the gist of the increase is to help strengthen FHA’s capital reserves.  I do not know if the reason the reserves have diminished is due to homeowners defaulting on FHA loans, and thus insurance having to be paid out.  The press release does not mention that, but I would be curious as to the reality.  As with all types of insurance, the more times it is used, the more everyone else will see an increase in costs.

The Upfront Mortgage Insurance Premium (UFMIP) will not change from the current 1.0% charge.

The following charts represent the MIP changes.

Loans with a term greater than 15 years:

LTV Through 4/18/11 On/After 4/18/11
≤ 95.00% .85% 1.10%
> 95.00% .90% 1.15%

Loans with a term of 15 years or less:

LTV Through 4/18/11 On/After 4/18/11
≤ 90.00% None .25%
> 90.00% .25% .50%

What this translates to, using a $300,000.00 loan amount as an example, is an increase of $62.50 additional per month.  It isn’t the end of the world, but when taking into account all your other payment responsibilities, it certainly can add up.  You can avoid this increase if you go into contract or refinance prior to April 18th.