If your purchase price is $100,000, and you choose to use a minimum down payment, which is 3.5 percent for FHA, you will pay $3,500 as a down payment, and the base loan amount would be $96,500. On a 30-year term, tthe upfront MIP will be 2.25 percent, which is usually financed into the loan. This $2171.25 amount is added, making the new amount $98,671.25. This odd amount is usually rounded down, making the new loan $98,650. The excess $21.25 will be added to the closing cost and collected at closing. This calculation creates the loan amount. To find the monthly MIP, multiply $98,650 times .0055 to get the added MIP, which equals $542.58. Divide by 12 to get a monthly amount of $45.21. This amount is the monthly amount that is eligible to be dropped off when the loan reaches 78 percent. Your loan must be current at the time it reaches 78 percent and, for FHA, a five year payment history must be paid for your lender to drop off the monthly MIP amount.
· 8 years ago