FHA Mortgage Insurance

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Buying a home with an FHA Loan? Putting less than twenty percent down? You will very likely be required to purchase FHA mortgage insurance.

What Is FHA Mortgage Insurance and Who Needs It?

Mortgage insurance in general is an insurance policy that protects home loan lenders against losses that result from defaults on home mortgages. FHA mortgage insurance protects lenders from losses in the event of a default by a borrower of an FHA loan.

You are more likely to qualify for an FHA loan than a non-FHA loan because FHA mortgages have flexible payment schedules and have more inclusive definitions of monthly income. And an FHA mortgage can help by reducing the up-front cash you need to purchase a home.

FHA mortgage insurance funds the FHA, and is paid for by you, the home buyer. If you are buying a house using an FHA loan and are making a down payment of less than 20 percent, you will very likely be required to purchase FHA mortgage insurance.

With an FHA loan, FHA mortgage insurance is charged to you each month at the rate of .5 percent per year of the total loan amount. You will also be charged an upfront mortgage insurance premium of 1.5 percent.

Your FHA mortgage insurance monthly premiums end approximately five years after signing the papers, or when the FHA mortgage balance is seventy-eight percent of the property value, whichever occurs last.

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