What are the FHA Mortgage Insurance Costs?FHA Mortgage Insurance Costs
FHA requires a mortgage insurance premium (MIP) for its home buying programs. An up front premium of 1.50% of the loan amount is paid at These insurance costs (which are the premiums) paid on the FHA loan is always significantly higher than on a conventional program. So don't be surprised to see a higher amount. On a FHA loan the first time home buyer will be charged a mortgage insurance premium equal to 1.50% of the purchase price of the property and a renewal premium of .500% in subsequent years. By contrast the mortgage insurance premium charged at closing on a conventional program is as low as .500% with renewal rate as low as .300% in subsequent years. But remember, most coventional programs require a 10% down payment, while the FHA program requires only a 3% down payment. So your closing costs will be a great deal lower with the FHA loan than with a coventional loan. So don't let these costs (which are the premiums) scare you.
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