Pittsburgh area home buyers:  If you’ve been thinking about buying a house, now might be a good time to get off the fence.

In April, it will become a little more expensive to obtain an FHA mortgage.  HUD is raising the cost of the mortgage insurance premiums (MIP) on FHA loans.  This will cost FHA borrowers more upfront and a little more each month.

When: The increase is effective with FHA case numbers received on April 9^th and thereafter.  Because it can take a day or two to obtain a case number, it would be wise for an FHA borrower to apply for their FHA loan a no later than April 7^th so that their case number is obtained prior to the change date.

Upfront MIP Change – the upfront MIP premium is changing from 1.0% to 1.75%.  This is a pretty hefty increase.  99% of all FHA borrowers finance this premium into their loan amount so this change should not affect their cash needed to close but will affect their mortgage amount and monthly payment.

Annual MIP Change – the annual MIP is the cost to renew the MIP premium and is paid for by borrowers on a monthly basis.  The annual MIP charge is changing from 1.15% to 1.25%.

While these are pretty significant changes to the MIP premiums, let’s take a look and see how it will potentially affect a borrower’s monthly payment based on a few different sales prices.  Let’s assume that the buyer is making the FHA minimum down payment of 3.5%.

Sales Price                 Estimated increase in monthly payment due to MIP increase

$100,000                                 $11 per month

$150,000                                 $18 per month

$200,000                                 $22 per month

$250,000                                 $29 per month

$300,000                                 $35 per month

 As you can see from the figures above, the change in MIP premiums will result in slightly higher payments for FHA borrowers.