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Find out how FHA Private Mortgage Insurance Works

How is FHA private mortgage insurance calculated?

Annette Bui | Updated June 18, 2020, | Mortgage Programs 101

FHA PMI is abbreviated for private mortgage insurance that comes in two parts. The upfront one time cost added to your loan balance and the secondary is the monthly amount based on a percentage of your purchase price. PMI used to fall off once you reach 78% of your loan to value. However, the rules have been changed for some time now and unless you put 10% down on the original purchase. The PMI does remain on the loan over the lifetime. Here's the upfront portion that is the more expensive part of the program and how it is calculated. The good news is you will have two options to lower or remove this insurance by either refinancing into a conventional mortgage once you reach 20% equity or electing a one-time premium buy out option that normally may be anywhere from $3,500 to $4,500 instead of the lifetime amount you would otherwise pay.








Comments

  1. Emma Jasmine11:49 PM

    This was a really informative post about FHA mortgage insurance. Many borrowers don’t fully understand how PMI works or how it affects their monthly payments. I like how you broke it down in a simple and clear way. It might also help to include tips on how borrowers can eventually remove or reduce PMI, especially in relation to changes in the bank home loan interest rate, which can impact refinancing decisions. Overall, a very practical and educational post for anyone exploring FHA loan options.

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