Every word of the film, for reading instead of watching.
Mortgage insurance is the reason a three and a half percent down payment exists at all. No lender hands you ninety six percent of a house on their own. FHA insures that loan, and this is what the insurance costs. So it isn't a fee bolted onto the loan.
It's the mechanism. Without it, the door doesn't open. It comes in two pieces. The first is upfront: one point seven five percent.
Six thousand seven hundred fifty five dollars on a three hundred eighty six thousand dollar loan. It gets financed in, so it doesn't come out of your pocket at closing. The second is annual, billed monthly. Just over half a percent a year.
About a hundred and seventy seven dollars. And here's something most people don't know. That premium is the same for everyone. Five eighty score, seven eighty score, same rate.
FHA prices it by how much you put down and how long the term is, not by how good your credit is. For a lot of borrowers, that makes it the most forgiving insurance available. How long you pay it gets decided at closing, by you. Ten percent down or more, and it ends after eleven years.
Less than that, and it runs with the loan. Two paths, and you choose one the day you sign. On the second path, the way out is a refinance. At twenty percent equity you can move to a conventional loan and leave the insurance behind.
When rates cooperate, that's a move a lot of people make. When they don't, you're weighing a lower payment against a higher rate, and sometimes staying is the better math. Either way it's your call, with real numbers in front of you. And if you go from one FHA loan into another within three years, part of that upfront premium comes back to you as a credit.
Biggest in the early months, smaller after that, but it's money returned, which most loans never do. So: six thousand seven hundred fifty five up front, about twenty one hundred a year, on a house you're living in now instead of later. Run that against what you'd pay in rent for the same years, and you'll know whether the trade is a good one for you.