The NMWelcomeHome Team Blog

The Federal Housing Administration (FHA) has decided to raise annual insurance premiums to as high as 0.9% of the loan amount, up from 0.55%. For new borrowers, that would translate into an average monthly payment increase of $40. At the same time, it will drop the upfront premium that borrowers pay when they take out a mortgage to 1%, from 2.25%.

This is in addition to the reduction of seller contribution from 6% to 3%.
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What does this mean to you? It means that mortgage insurance premiums could increase your monthly payment and therefore reduce the amount of a home you could afford. For example if your monthly payment is raised by $40 to cover the insurance premium it could reduce the amount of your home purchase by $7,000.

So if you are currrntly approved up to $150K right now, when the increase happens and you have not put a home under contract your new approval will be $143K.

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