February 28th, 2023 10:22 AM by Sam Kader MLO130505
HUD and VA have both announced reductions to the costs associated with their loans.
FHA Annual Rate reduction.
HUD announced in FHA Mortgagee Letter 2023-05 reduction of 30 basis points (bps) to the annual mortgage insurance premium (MIP) rates. The annual mortgage insurance premium reductions are noted in the table below and are effective for mortgages endorsed for insurance by FHA on or after March 20, 2023. The 30 basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by FHA. Further, the reduction applies to all eligible property types, including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.
Please note, there is no change to the upfront Mortgage Insurance Premium (UFMIP), this change only impacts annual (paid monthly) MIP. See below for a grid of the new rates versus the old rates.
New FHA Annual MIP RatesFHA streamline Refinance and Simple Refinance
This announcement applies to the active pipeline, and all FHA transactions except Streamline and Simple Refinance transactions used to refinance a previous FHA-endorsed Mortgage on or before May 31, 2009.
There is no change to the annual MIP for Streamline and Simple Refinance transactions.
VA Funding Fee The VA recent acnnouncement in Circular 26-23-06 for a reduction to VA funding fee rates for loans closed on or after April 7, 2023. See below for a grid of the new funding fee versus the old funding fee.
Funding Fee for loans closed on or after 04/07/23:
Loan Purpose
Down Payment
% for 1st Time Use
% for Subsequent Use
Purchase
0 – 4.99%
2.15%
3.30%
5 – 9.99%
1.50%
10% or More
1.25%
Refinance
N/A
Funding Fee for loans closed prior to 04/07/23:
2.30%
3.60%
1.65%
1.40%