FHA has recently announced that they will be cutting their annual insurance premiums from 1.35 percent to .85 percent. What this means for borrowers who finance with an FHA loan is a significant savings each year.
Traditionally, FHA has always been a good financing option for first-time homebuyers, only requiring a 3.5 percent down payment. However, in recent years, FHA has been increasing their monthly insurance premiums, making this loan program more expensive than some other options.
Your Allen Tate Mortgage Consultant can offer you a side-by-side comparison between an FHA loan and the new 3 percent down payment loan offered by FNMA (Fannie Mae) to see which product is a better fit for you.
For buyers with a lower credit score, FHA may be the better option. One thing to keep in mind is that the monthly insurance premium on an FHA loan cannot be cancelled. With the FNMA loan option with 3 percent down, you can request to drop the insurance when you have equity in your home of 20 percent or more.
The reduction in the FHA premium, along with the new 3 percent down payment option by FNMA, are evidence that the industry is making it more affordable to purchase a home. Both of these programs will also consider a gift for a down payment, which helps renters – who often struggle with saving for a down payment – become home buyers.
The FHA premium reduction goes into effect on January 26, and makes an FHA loan worth considering. Let us walk through the options with you to see what you may qualify for.
Lisa Green (Vice President of Loan Origination)
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
*Some restrictions apply and all loans are subject to final approval