7 crucial facts about FHA loans

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

2-part mortgage insurance

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75 percent 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.

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


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