Explore the Mortgage101 Library
Check Local Mortgage Rates
Calculators
FEATURED CALCULATORLoan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
TERMINOLOGY
The FHA requires a mortgage insurance premium (MIP) for its home-buying programs. An up front premium of 1.50% of the loan amount is paid at closing and can be financed into the mortgage amount. In addition, there is a monthly MIP amount included in the PITI of .50%. Condos do not require up front MIP - only monthly MIP.
The mortgage insurance premium paid on an FHA loan is always significantly higher than on a conventional program. On an FHA loan the borrower will be charged a mortgage insurance premium equal to 1.50% of the purchase price of the property and a renewal premium of .500% in subsequent years.
By contrast the mortgage insurance premium charged at closing on a conventional program is as low as .500% (with 10% down payment) with renewal rate in subsequent years as low as .300% in subsequent years.
More Articles...
What Are Typical Mortgage Down Payments?
FHA Eligibility with Bankruptcy and Foreclosure
- Low Down Payment Loan Qualification
- 3 Common Short Sale Mistakes
- Second Mortgages: Advantages and Disadvantages
- Appraisal Basics
- Home Equity Loans for People with Bad Credit
- What To Do When Mortgages Default
- Short Selling a Rental Property
- 3 Reasons Banks Reject Short Sales
- How to Get Approved for an FHA Loan despite Bad Credit