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7 crucial facts about FHA loans

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2-part mortgage insurance
2-part mortgage insurance © Jakub Krechowicz / Fotolia

2-part mortgage insurance

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75% of the loan amount -- $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.

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The 2nd is called the annual premium, although it is paid monthly. It varies based on the length of the loan, the amount borrowed and the initial loan-to-value ratio, or LTV.

Annual premiums for FHA loans

  • 15-year loan, down payment (or equity) of less than 10%: 0.7%
  • 15-year loan, down payment (or equity) of 10% or more: 0.45%
  • 30-year loan, down payment (or equity) of less than 5%: 0.85%
  • 30-year loan, down payment (or equity) of 5% or more: 0.8%

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