How this number is made
FHA loans charge an up-front mortgage-insurance premium, often financed, and an annual premium paid monthly. Both rates change by mortgagee letter and by term and loan-to-value. The percents here are inputs. The defaults are a commonly cited pair, not a quote.
- Confirm the year’s up-front and annual rates before you rely on the default.
- The base loan is before the up-front premium is added.
Formula
Up-front premium = base × up-front percent. Amount financed if you roll it in = base + up-front premium. Monthly premium = financed amount × annual percent ÷ 12.
Worked example
With the figures already in the form, monthly premium if the up-front fee is financed is $139.91.
Questions
Do I have to finance the up-front premium?
No. You can pay it in cash. If you finance it, the monthly mortgage insurance in this page is calculated on the larger amount, which is what FHA does.
When does the annual premium end?
On many FHA loans with a small down payment it lasts the life of the loan. On some with more down it can end after 11 years. This page does not apply that rule. Read the mortgagee letter for the case.