FHA Mortgage Insurance Rule Changes as of June 3rd, 2013

New FHA MIP Cancelation Policy Begins June 3, 2013

The Federal Housing Administration also made a second MIP-related announcement -- the agency is reversing its policy which allows FHA-backed homeowners to cancel mortgage insurance premiums once the outstanding principal balance of an FHA loan reaches 78 percent of the original balance.
Going forward, the FHA will disallow the removal of MIP throughout the life of a loan, if the loan's starting loan balance is higher than 90% of its appraised value. This is true for purchases and refinances.
For loans in which the loan-to-value begins at 90 percent or less, mortgage insurance premiums must be paid for 11 years. This change goes into effect June 3, 2013.