The Federal Housing Administration currently insures 4.8 million bucks, according to its website. The U.S. Congress created the FHA in 1934 when only 40 percent of homes in America were occupied by their owners. The FHA provides people in all economic situations the chance to get their own home. The FHA does not lend any money. On the contrary, it insures mortgage lenders against losses when they underwrite mortgages to FHA guidelines. In addition, borrowers should pay a mortgage insurance premium, or MIP, both in the finish of the loan and every month with their mortgage payment.
Determine the maximum loan amount to the county where the home you want to fund is situated. The FHA’s website has a database that sorts every county in every country and can provide you with the maximum loan amount to your county. While the cost can exceed the maximum loan amount, in the event the cost is a lot higher, a down payment exceeding the minimal 3.5 percent may be asked to qualify for an FHA loan.
Subtract the down payment of at least 3.5 percent in the cost of the home. Multiply the equilibrium by 2.25 percent. In the event the cost of the home is $200,000, the minimum down payment would be $7,000, leaving a balance of $193,000; 2.25 percent of 193,000 is $4,342.50. The $4342.50 is the Up-Front Mortgage Insurance Premium, or UFMIP. Borrowers may pay this in the finish of the loan, or even fund it in the loan.
Insert the UFMIP to the loan amount if it is financed. In the example, $193,000 plus $4,342.50 equals $197,342.50. The monthly insurance premium, or MIP, is 0.50 percent of the loan amount. Multiply the amount of the loan by 0.50 percent, and divide the amount by 12. $197,342.50 multiplied by 0.005 is $986.71; $986.71 divided by 12 equals $82.23. The actual amount is 82.226, but the FHA requires rounding to the nearest cent. Insert this amount to the monthly principal, interest, taxes and hazard insurance payment to determine the total monthly mortgage payment.