After the real estate crash, to cover their losses and continue to offer the FHA loan program, HUD raised the Mortgage Insurance Premium fees they charge to borrowers to insure FHA loans.
HUD just announced that they will be lowering those fees again beginning January 27th. Here is a simplified chart to show the improvements:
The biggest winners though may be those that are able to refinance right now. Most people getting an FHA loan made a small down payment with a 30 year loan at 0.85% annual MIP. On a loan amount of $200,000, that’s $141.66 monthly MIP. With home appreciation and monthly payments, most people will have over 5% equity built up so refinancing simply to reduce the MIP would save $41.66 per month at the new reduced MIP amounts.