In this blog, we will cover FHA mortgage insurance premium on 15 versus 30-year fixed-rate FHA loans. FHA-insured mortgage loans are a great program for first-time home buyers. For borrowers needing a home loan with bad credit, FHA-insured mortgage loans are ideal for first-time home buyers.
FHA loans are perfect for those who need a home loan with bad credit to realize the dream of homeownership a reality. To qualify for a 3.5% down payment FHA-insured mortgage loan for first-time home buyers.
FHA loans are ideal for homebuyers seeking a home loan with bad credit. The minimum credit score required is 580. In this article, we will discuss FHA loans’ benefits and costs.
Benefits of FHA Home Loans
The Federal Housing Administration makes homeownership possible for those with the following:
- have had prior bankruptcies
- foreclosures
- deed-in-lieu of foreclosures
- short sales
- those who have had credit issues and still have an unsatisfied collection and charge-off accounts
- Borrowers can qualify for a mortgage loan approval with outstanding collection accounts, charge-offs, and prior bad credit.
This holds true as long as borrowers have been timely for the past 12 months on monthly credit obligations. They should get approve/eligible per Automated Underwriting System Findings.
FHA Mortgage Insurance Premium: 30-Year Fixed Rate FHA Loans
Homebuyers seeking an FHA-insured mortgage loan require a 3.5% down payment toward the home purchase. Borrowers will also be charged a 1.75% upfront FHA MIP, which can be rolled into the mortgage loan balance.
For 30 years fixed rate FHA loans, there is also a 0.55% annual MIP. This is paid monthly, along with the mortgage payments. The annual mortgage insurance premium is 0.55% of the mortgage balance.
Borrowers need to pay this mortgage insurance premium for the life of the FHA loan. The only way Borrowers get out of paying the monthly FHA mortgage insurance premium is when they pay off the mortgage.
15-Year FHA Mortgage Insurance Premium
The Federal Housing Administration has a special mortgage insurance premium reduction program. For homebuyers who put a 10% down payment on a 15-year fixed-rate FHA loan, the mortgage insurance premium will greatly be reduced from the standard 0.85% of the mortgage balance amount to 0.45%.
This reduction in mortgage insurance premium is a huge saving throughout the loan. Also, another perk with an FHA 15-year fixed rate mortgage loan is that you can cancel the FHA mortgage insurance premium on the 11th year if and only if your FHA loan to value is at 78% or lower.
For borrowers needing to qualify for a mortgage with a national direct lender with no mortgage overlays, please contact Gustan Cho Associates at 262-627-1965 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, on evenings, weekends, and holidays. Gustan Cho Associates are mortgage brokers licensed in 48 states, including Washington, DC, Puerto Rico, and the U.S. Virgin Islands. Gustan Cho Associates has no has zero overlays on government and conventional loans.
