Your Tucson FHA Home Loan and Mortgage Insurance


By Joseph Small

Will my Tucson FHA Loan require me to have mortgage insurance?

As with all home loans, there exists a risk that a borrower will go into default on their home loan. For those who put down less than 20% as a down payment on their homes, the default rate jumps. An FHA loan only requires a minimum 3.5% down payment, which is considered a very low down payment and commonly used here in Tucson and in Sierra Vista, Arizona. Mortgage insurance or MI is an insurance policy that protects lenders against losses that result from defaults on home loan mortgages. FHA loan requirements include mortgage insurance, which is primarily for borrowers making a down payment of less than 20 percent.

There are two types of mortgage insurance on an FHA mortgage. The First is what is called the Upfront Mortgage Insurance Premium or UFMIP. This is a one time charge that is typically rolled into the home loan. The second type is called the Annual mortgage insurance or MI. This is the one that will effect you the most because it is part of your monthly payment.

What exactly is mortgage insurance anyways?

Every borrower that is applying for an FHA loan should be asking this question. What exactly is mortgage insurance anyways?

The Federal Housing Administration insures FHA mortgages against default. So an FHA insured mortgage is a one that his backed by the government against the possibility that the borrower will go into default, which protects the lender against a loss on their investment.

How long will I have this Mortgage Insurance?

In most cases, the mortgage insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property – whichever is longer. You can read more: HUD Gov website
Important Update: FHA Mortgage Insurance for life

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Joseph Small and his team at Guild Mortgage Company is your trusted source for all your FHA home loan mortgage needs in Tucson, Sierra Vista, Oro Valley and Vail, Arizona.

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