April 9, 2012 (Chris Moore)

Getting a mortgage loan insured by the Federal Housing Administration (FHA) just got a little more expensive today as new fees designed to help replenish the agency’s depleted reserves kick in today according to the Department of Housing and Urban Development (HUD)

The new fees include a higher upfront insurance premium charge, rising from one percent to 1.75 percent, and an increase of 10 basis points for annual mortgage insurance premiums.

Additionally, on June 1, 2011, the FHA is also raising the annual mortgage insurance premiums for loans over $625,000 an additional 25 basis points.

The FHA projects that the additional fees will contribute over $1 billion to its Mutual Mortgage Insurance (MMI) Fund which has been depleted by the large number of home owners who have defaulted on their mortgages.

However, the 10 basis point increase in the annual insurance premium won’t go into the FHA’s coffers, it’s part of the Temporary Payroll Tax Cut Continuation Act of 2011, the federal government’s way of giving new FHA borrowers the privilege of paying for the one-year reduction in Social Security Payroll taxes.

The good news is current FHA borrowers who took their loans out on or before May 31, 2009, and who wish to refinance their homes through the FHA’s streamline program will get a reduction in their fees.

Beginning June 11, 2012, the FHA will lower its upfront insurance premium to just .01 percent and reduce its annual premium to .55 percent. In order to qualify, borrowers must have made all of their last 12 payments.

Tags: FHA, HUD, mortgage loan, fees, insurance premium, upfront fees, mortgage insurance