CHARLOTTE – First and foremost, an FHA loan is a loan backed by the federal government, specifically HUD.  This loan allows for borrowers to get extremely competitive interest rates and the ability to put as little as 3.5% down on a home, even if the credit score is not absolutely perfect.  The only downfall with an FHA loan, in the past, would be that the mortgage insurance was typically a little higher than a conventional loan, but that has now changed! The government has noticed that there is an issue with affordability in the housing market, specifically first-time home buyers (who typically use FHA loans) and has taken action.

The mortgage insurance premium on a FHA loan has been lowered by 30 basis points for all borrowers closing on a home at the end of March and beyond.  Of course, it is not expected that everyone knows what a basis point is, but here’s an example.  On a $300,000 loan the average mortgage insurance in the past would be approx. $212/month.  On that same $300,000 loan, the mortgage insurance moving forward will reduce to approx. $137/month saving the client approx. $75/month on the same loan/payment.

All in all, the best news of all is that it seems as if actions are being taken to overcome some of the affordability issues individuals are faced with when it comes to becoming a homeowner.  As more programs arise, we will certainly keep everyone updated.  As always, if there are any questions, feel free to reach out anytime (brandon.wolf@primisbank.com/ (704) 430-6138.