FHA Mortgages

FHA Mortgage Insurance coverage Choices – FHA Information and Views


There are many things you need to know about FHA mortgage insurance premium, but if this is your first time home buying, there are a few things you should know as early as possible so that you can make the best possible decisions about your home loan, what you finance and how much you can save.

Know your options

To prepare for a home loan, you need to learn what items to include in the loan amount and how much you will be paying for the interest rates on the loan amount AND the add-ons you choose during the life of the loan.

And this is where understanding FHA mortgage insurance becomes very important.

One thing that some people are initially confused about? Confusing PMI or Personal Mortgage Insurance with FHA Mortgage Insurance Premium. PMI is not the same and is not required for FHA mortgages. The FHA mortgage insurance premium is required on a monthly basis and an upfront premium is also payable.

How long will you pay

FHA mortgage insurance is usually either for 11 years or for the duration of the home loan, depending on variables such as the loan period.

As mentioned above, PMI is not required for an FHA mortgage, but it is typically required for conventional loans unless you make a 20% down payment.

Mortgage loan myth

Are borrowers confused by assuming you can repay an FHA mortgage 20% and avoid mortgage insurance altogether as you can with a traditional mortgage?

Yes, they do.

That is not true. You can’t pay a 20% down payment and avoid mortgage insurance and FHA mortgage. Prepayment and monthly payment are required.

FHA loans require UFMIP, or the Up-Front Mortgage Insurance Premium, or UFMIP, and you can either pay for them in full in cash at close of business or fund them in the loan amount.

Full payment

It is here that you know how and when to pay – first time home buyers are often surprised that their 30 year loan (or any other loan term for the FHA loan) requires that payment in full whichever method is chosen.

You cannot partially pay or partially finance the mortgage insurance premium in advance. Because of this, it’s good to decide what to do with these costs early on – you may need additional time to save up paying for them in cash if you choose this route.

Just remember that your home loan must start as early as possible so that you can save the most money, develop the best habits for improving your creditworthiness, and prepare your finances by working on lowering your debt ratio and lowering your credit card balances.

Find out more about the path to home ownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we’ll get you there in 9 steps.

Step 1: How Much Can You Afford?
Step 2: Know Your Home Buying Rights
Step 3: basic mortgage terminology
Step 4: buy a mortgage
Step 5: shopping for your home
Step 6: Make an offer to the seller
Step 7: get a home inspection
Step 8: home insurance
Step 9: what to expect upon graduation