The Federal Housing Authority (FHA) just made the American dream of homeownership more accessible by lowering their monthly mortgage insurance premiums from 1.35% to .85%. Two Atlas clients are already feeling the positive impact by saving over $80/month because of the change that went into effect January 26, 2015.
If you have moved from the dreaming stage to the searching stage, on average, your budget could go up another $10,000-$20,000. While that doesn’t have an impact on those with multimillion dollar budgets, it could mean an extra bedroom, a nicer kitchen or a finished basement, for instance, if you can extend your original budget of $280,000 to $300,000.
Whereas FHA program offers a minimal down payment (3.5% of the purchase price) at the same interest rate whether you have a 620 credit score or 800, other options also have a sliding scale for the interest rate based on the your credit score. Working with a lender when you start your search is imperative to insure the right program for you.
Just to recap current FHA guidelines, fees and requirements:
Minimum Credit Score: 620
Minimum Down payment: 3.5%
Up-front Mortgage Insurance: 1.75% of loan amount
Monthly Mortgage Insurance: .85% of remaining balance
Comparison of FHA monthly mortgage insurance rates*:
|Monthly Mortgage Insurance||269.03||169.39|