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Apply for an FHA Mortgage

The FHA Mortgage Insurance Premiums, mostly commonly referred to as MIP, are charged by HUD to protect investors against default. Using these premiums paid into a fund, HUD Guarantees the performance of every FHA Loan and protects a percentage of the lender’s investment. In return, this mandatory premium enables borrowers who might not otherwise fit within Freddie/Fannie conventional guidelines, to receive funding for the purpose of Buying A Home or Refinancing at conventional Mortgage Rates.

The net affect of the premiums on your loan are not that much different than the more traditional PMI premiums charged on a conventional mortgage. If you compare them, you’ll find that the monthly MIP payment with the FHA mortgage is typically less than half the cost of PMI. What many borrowers are usually concerned with is the upfront MIP which is added into the loan at financing.

FHA has several types of Mortgage Insurance. Depending on the type of property and the type of loan transaction, one or more of these insurance types may apply to your situation.

Mutual Mortgage Insurance (MMI):

Applies to 1-4 unit houses and eligible PUD’s for both Fixed Rate and ARM transactions. (HUD program codes: 203b (fixed rate) and 251 (ARM). Within this MMI fund, there are 2 kinds of mortgage insurance that may apply to the transaction: Upfront MIP and Monthly MIP:

General Insurance Fund (GI):