mortgage

FHA changes home mortgage rules

Annual mortgage insurance premium
Annual mortgage insurance premium

This part of your mortgage insurance premium is calculated annually, broken into 12 parts, and paid monthly with your mortgage.

Old rules: The rate was 0.55 percent of the loan balance annually. For a $177,000 home with 3.5 percent down and a $170,805 mortgage, that amounted to $78 per month for the first year. (The fee, which is based on the loan balance, decreases annually.)

New rules: The rate goes to 0.9 percent. With that $170,805 mortgage, it will cost $128 per month the first year.

While it's not anticipated in the near future, the FHA has authority to raise the fee on future borrowers to as high as 1.55 percent, Bott says.

What you need to know: The rules go into effect Oct. 4. Changes to the upfront and annual fees make it a little easier for borrowers to close, but add a little to the monthly mortgage. But with lower mortgage rates, the move to 0.9 is "really kind of a wash," Nicholas says.

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