FHA to raise mortgage insurance premiums…again

The Federal Housing Administration announced that it would increase the mortgage insurance premiums for FHA mortgages beginning April 1st, 2012.  Here is the announcement copied from the FHA website:

…FHA announced a new premium structure for FHA-insured single family mortgages: as of this spring, the annual mortgage insurance premium (MIP) will increase by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount;  and upfront premiums (UFMIP) will increase by 0.75 percent…these changes would have a minimal effect on homeowners.

Currently, borrowers who opt for a FHA 30-year fixed rate putting the minimum 3.5% down payment finance an upfront mortgage insurance premium equal to 1% of their loan and then pay monthly mortgage insurance based on a 1.15% annualized premium.  Under the new structure the upfront mortgage insurance premium will increase to 1.75% (+.75%) and the annualized premium used to determine the monthly mortgage insurance payments will increase to 1.25% (+.10%).

How do these changes impact mortgage payments?  Here is a chart comparing the new and old structures based on a $200,000 purchase price, 3.5% down payment, for a 3.75% FHA fixed rate: