Aug 15 • 👋 Thomas Q&A
How does PMI work with FHA?
For an FHA (Federal Housing Administration) loan, the mortgage insurance is referred to as Mortgage Insurance Premium (MIP), rather than Private Mortgage Insurance (PMI) as used with conventional mortgages.
Here's how MIP works with FHA loans:
• Down Payment and MIP Duration:
◦ If you put down less than 10% as a down payment on an FHA loan, the MIP is for the life of the loan.
◦ If you put down 10% or more, the MIP automatically goes away in year 11.
• Approval and Accessibility: FHA loans typically allow for a minimum down payment of 3.5%. They can offer higher approval amounts than conventional mortgages due to a higher debt-to-income ratio requirement and can close quickly.
• Purpose: FHA loans are not exclusively for first-time homebuyers but can be used by them, and they require the property to be owner-occupied for at least one year.
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How does PMI work with FHA?
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