FHA PMI update

This is an update to an earlier post reagarding FHA’s version of Mortgage Insurance (which is sometimes referred to as PMI).

As we mentioned, FHA mortgages have a one-time mortgage insurance premium, known as upfront mortgage insurance. The cost of this insurance has bounced around alot this year – and is NOW 1.75% of the loan.

This upfront fee is non-refundable.  There’s also a monthly fee that’s based upon several things, but will generally run .5% of the loan amount.  If you live in the property for more than 5 years, and you have a 20% equity gap – the monthly amount can be dropped just like with it’s conventional counter part – PMI.

The program is similar to the USDA and VA programs.  Both of those loan programs have a type of mortgage insurance (called a Guarantee Fee), that’s non refundable.  The biggest difference is that FHA also has a monthly fee collected.

The common belief that the monthly mortgage insurance on a FHA loan is very expensive is wrong.  Unlike a Conventional Loan, no matter how much you put down, it’s either .55 percent or .50 percent of your base loan amount. When you compare this program to a Conventional Loan Program that requires PMI, you would need to put down at least 10% down in order to get to .52 percent.

These PMI amounts are accurate for Condos, 203k loans – or regular 203b FHA loans.

For more info – call Steve Thorne, First Financial Services, 919-649-5058 – FHA Mortgage Loan Specialist!

Popularity: 17% [?]