Do you have to pay PMI on an FHA loan?
- Anonymous1 decade agoFavorite Answer
FHA loans have a Mortgage Insurance Premium that is added as a part of the monthly payment. That amount per month is equal to 1/2 of 1% of the loan amount divided by 12 which is much lower than comparable PMI.
Despite what an earlier responder stated, FHA MIP does eventually drop off. I just can't remember off the top of my head what the LTV requirement is when it is waived.
FHA is still one of the best options for a first time buyer for several reasons:
Loan fee is limited to 1%
FHA has some costs that they require the seller pay that the buyer has to pay on conventional l oans
FHA will allow 100% gift for the down payment as long as the gift is from a blood relative
FHA loans are assumable via qualifying assumption, conventional loans are not assumable
Income calculations for no-occupant co-borrowers is lumped with the occupant borrower for qualifying purposes.Source(s): 20+ years as a direct mortgage lender
- Anonymous1 decade ago
It's not PMI (Private Mortgage Insurance) but rather MIP (Mortgage Insurance Premium) that is paid on FHA. The two are fairly similar, but just know that MIP on an FHA loan never goes away. The amount will decrease as the loan amount decreases, but you'll always pay it.
In my experience there are very few situations where FHA is the best option. When they pass some of the reforms that are making their way through Congress, it will likely become a better option again - but in the meantime just make sure that you aren't doing an FHA loan just because it pays whoever is doing your loan more.Source(s): http://nosurpriseloans.com
- 1 decade ago
I believe that PMI is required on any type of first mortgage loan that has a loan-to-value ratio of 80% or greater. However, you can avoid PMI by financing up to just under 80% with a first and then getting a second for the remaining amount owed. The second will have a higher interest rate than the first. But, at least the interest paid on the second is tax-deductible, where PMI is not.
- Anonymous1 decade ago
Until you have at least 20% equity AND have had the loan 5 years, yes.
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- Anonymous3 years ago
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