It is rumored that tomorrow President Obama will announce that FHA will be reducing the annual FHA mortgage insurance premiums by .5 percentage points from 1.35% to .85%. The idea behind the decrease is to help current home owners with FHA loans save on their monthly mortgage costs and to enable more new entry-level home buyers to qualify for and purchase homes, and overall  to support increased home sales and bring balance to the housing market.

An example of what this savings might look like: FHA MIP
$400,000 loan amount
1.35% mortgage insurance premium (MIP)
$450/month for the FHA MIP
$400,000 loan amount
.85% mortgage insurance premium (MIP)
$283/month FHA MIP – a $167/month savings!