Significant changes to FHA loans
There are a number of changes to FHA loans that will take place this year.
Change to FHA loans starting April 1:
— Higher annual mortgage insurance. About $16 per month on a $200k purchase.
Changes to FHA loans starting June 1:
— Mortgage insurance (MI) will now be for the full term of FHA loan
— No longer eligible to cancel MI unless client puts down 10% or more at the time of purchase.
— If you're going to put 10% down, most likely it will be a conventional loan anyway
— Still have up front and monthly mortgage insurance
The bottom line is that it's probably not a huge impact because most people will refinance or sell the home by the time there is 20% equity. But those people that truly intend on staying in the home for at least 15 years (just a guess) may want to consider a conventional loan.