Profile picture for limitalice104

Is there an FHA loan product without mortgage insurance?

Also, besides loan amount what are other factors which determine the amount of mortgage insurance that will be required?
  • July 19 - US
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Answers (11)

There will be no mortgage insurance on an FHA mortgage if you make a down payment of at least 20%
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Really?  How do you plan to stand by that statement when your buyer sues you?
  • July 21
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Hamp Yonce, is right, FHA is the last resort. That's why most borrowers that can, go with 5% down conventional loan products. The Mortgage insurance is MUCH cheaper. 
  • July 21
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Just for clarification for the OP, and other RE financing first graders, that may eventually read this.

"FHA" equals Mortgage Insurance!
That's all they do!
They don't make loans!
They provide Mortgage Insurance for loans, made by Lenders!
They can't do anything else!
FHA currently provides the most expensive Mortgage Insurance known to man!
FHA is the loan product of last resort!
  • July 21
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Like most have stated below, all FHA loans have mortgage insurance. What nobody has mentioned is that if you're looking to minimize your down payment, but not wanting to pay the expensive mortgage insurance that comes with FHA loans, you might want to consider putting 5% down on a conventional loan and go with LPMI (lender paid mortgage insurance). It's a form of mortgage insurance that's much cheaper than what FHA offers. 

Contact info is in my profile if you have any other questions!
  • July 21
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FHA no matter what will have MI and an upfront MIP. If you have the money to put down you should probably go conventional to eliminate MI. To answer your second question, paying private mortgage insurance has a few factors that go into the amount you would hypothetically pay, they look at loan amount, LTV credit score, term of mortgage, what type of occupancy, number of units etc. Most lenders will be able to calculate scenarios for you based on your particular situation. Feel free to reach out through my profile if you need any additional help.
  • July 21
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Not surprising the lenders gave correct answers, and the agents did not. With 10% or more down an FHA MIP is for 11 years on a 30 or 15 year loan. Monthly MIP is also lower for a 15 year vs 30.
As mentioned, FHA has advantage if down payment is limited, low credit scores, and previous BK/default issues.
  • July 20
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Clay is correct. FHA changed their rules regarding FHA mortgage insurance. It doesn't matter how much you put down.  If you go FHA, you WILL HAVE mortgage insurance.  FHA is still a good loan for a person who has low scores.  FHA rates are significantly lower (when compared to conventional), especially for someone who has lower scores.  Also, FHA is also more lenient with previous foreclosures (only have to wait 3 years) and previous bankruptcies (only have to wait 2 years).  In addition, you only need 3.5% down with FHA and the down payment can be gifted.  So even though you can't get out of mortgage insurance...FHA is still a very good product for a certain group of customers.  Every FHA loan has 1.75% up front mortgage insurance (this amount is built into your loan amount).  In addition, there is a monthly mortgage insurance amount.  If you put 5% down (instead of 3.5% down), it will be slightly less.  Also, if you shorten the term of your FHA loan, your monthly mortgage insurance will also be reduced.
  • July 20
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Please stop using the 20% figure, they could put down 80% and would still have to pay both upfront MI and annual MI. As Justin stated, all FHA loans have MI.
  • July 20
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Sure, put 20% down, but in that case you may get a better rate going Conventional.  
  • July 20
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All FHA loans have mortgage insurance, the amount is determined by the loan term and percentage down payment made. The insurance on 15 year term is a very reasonable amount when you consider the interest rates available, whereas longer term FHA loans have very expensive insurance and should only be considered if you are unable to qualify for traditional conventional Fannie Mae financing,
  • July 20
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Hello,

There will be no mortgage insurance on an FHA mortgage if you make a down payment of at least 20%.  You should also know that FHA will soon roll out a program that they claim gradually lowers your interest rate when you attend a pre-purchase home buying class.  That reduced interest rate will more than offset the amount of your monthly payment applied toward mortgage insurance.
  • July 20
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