You know there's a catch, and here it is :
Because FHA loans do not have strict conventional Loan standards, it takes two types of mortgage insurance premiums:
- one is paid in full-or it can be Financed into a mortgage
- and the other is a monthly payment. In addition,
FHA loans require that the house meet certain requirements and must be assessed by an FHA-approved appraiser. Mortgage insurance premiums upfront (UFMIP) - As the name implies, this is a one time upfront payment of a monthly premium, which means the borrower will pay a premium of 1.75% of the home loan, regardless of their credit score. Example: $ 300,000 loan x 1.75% = $ 5,250. This amount can be paid upfront at closing as part of the settlement fee or can be rolled into the mortgage. Annual MIP (charged monthly) - Called annual premiums, this is actually a monthly bill to be thought out in your mortgage payment. The magnitude of the mortgage insurance premium is the percentage of the loan amount, based on the borrower's advance to-esteem (LTV) ratio, loan size, and loan duration:
1 For example, an annual premium of $ 300,000 loan with 30 years and LTV less than 95 percent will be $ 2,400: $ 300,000 x 0.80% = $ 2,400. To know the monthly payment, share $ 2,400 to 12 months = $ 200. So, the monthly insurance premium will be $ 200 for every month
.
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Loan Term Loan Amount LTV Ratio Annual Insurance Premium
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Over 15 years $625,000 or less 95% or less 0.80%
Over 15 years $625,000 or less 95% or less 0.80%
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Over 15 years $625,000 or less Over 95% 0.85%
Over 15 years $625,000 or less Over 95% 0.85%
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Over 15 years Over $625,000 95% or less 1%
Over 15 years Over $625,000 95% or less 1%
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Over 15 years Over $625,000 Over 95% 1.05%
Over 15 years Over $625,000 Over 95% 1.05%
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15 years or less $625,000 or less 90% or less 0.45%
15 years or less $625,000 or less 90% or less 0.45%
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15 years or less $625,000 or less Over 90% 0.70%
15 years or less $625,000 or less Over 90% 0.70%
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15 years or less Over $625,000 90% or less 0.70%
15 years or less Over $625,000 90% or less 0.70%
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15 years or less Over $625,000 Over 90% 0.95%
15 years or less Over $625,000 Over 90% 0.95%
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