mortgage

7 crucial facts about FHA loans

Mortgage insurance is a must
Mortgage insurance is a must

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75 percent of the loan amount and is paid when the borrower gets the loan but can be financed as part of the loan amount.

The second is the annual premium, which varies based on the length of the loan, the amount borrowed and the initial loan-to-value ratio (LTV). The current annual premiums for loans less than $625,500 are:

  • 15-year loan, LTV more than 90 percent: 0.70 percent
  • 15-year loan, LTV 90 percent or less: 0.45 percent
  • 30-year loan, LTV more than 95 percent: 1.35 percent
  • 30-year loan, LTV 95 percent or less: 1.3 percent

"The perception is that that sounds expensive," Geist says.

However, he adds, borrowers need to compare the FHA-insured loan to a loan that's not FHA-insured (and consequently requires a much larger down payment). In many cases, the FHA loan is still the best choice, he says.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE & REAL ESTATE NEWSLETTER

Timely market news and advice for consumers ready to buy, sell or invest in real estate. Delivered weekly.

Blog

Polyana da Costa

Home prices rise at slower pace

Home price growth has slowed significantly. Should you be concerned?  ... Read more

advertisement
Partner Center
advertisement

Connect with us