ANOTHER CHANGE! Yes, it's that time of the year and HUD/FHA is making it harder to obtain an FHA mortgage. The Federal Housing Administration (a division
of the Department of Housing and
Urban Development is:
● revising the period for assessing the annual MIP (Commentary: in other words, you may not be able to eliminate the monthly mortgage insurance premium);
● removing the exemption from the annual MIP for loans with terms of 15 years or less and Loan to Value (LTV) ratios of less than or equal to 78 percent at origination (Commentary: so it you have a substantial down payment or short loan term, you will not get any breaks from HUD); and
● increasing the annual MIP on all forward mortgages except single family forward streamline refinance transactions that refinance existing FHA loans that were endorsed on or before May 31, 2009 (see ML 2012-4.pdf).
This page will attempt to explain the FHA loan calculation and the FHA monthly mortgage insurance premium (MIP) over the past few years. A more detailed explanation can be found on the FHA Funding Fee Explanation page. The FHA loan program does not have a sales price limit, however, the Federal Housing Administration does set maximum loan amounts for each US county. The typical loan limit for a single family residence or condominium is $271,050, for two residential units (duplex), the loan limit is $347,000, three units, the limit is $419,425 and a four unit dwelling is $521,250. There are county exceptions. You can see the FHA loan limits for your county on the side bar below. You will be redirected to an ancillary web site.
The FHA requires applicants to pay in cash
or finance a "funding fee"
with the FHA loan. The amount of the "funding fee" has changed several time
over the past few years. The applicant is also required to pay a monthly mortgage
insurance premium (mip).
Calculating the FHA home loan can be a bit
confusing, particularly with the numerous changes that have occurred over the
past few years. The following chart illustrates the changes to the down payment,
upfront mortgage insurance premium and monthly mortgage insurance premium (mip).
(Also called pmi). If the sales price exceeds the maximum loan amount, the down
payment will have to increase. See the FHA jumbo loan calculation below.
You can also use the FHA Funding Fee & MIP Calculator to estimate the FHA loan amount and monthly mortgage insurance premium.
MAXIMUM FHA LOAN CALCULATION
Hopefully, you have a better understanding of the FHA home loan and monthly mip calculation, but wait; that's not all. FHA loans have "maximum" loan amounts based on the US county! . . . and the maximum FHA loan limit increases based on the number of living units within the dwelling. You can view the FHA loan limits for your state with the links on the right. You will be redirected to an ancillary web site - but don't forget to bookmark this site. The following example assumes a sales price of one million dollars (jumbo FHA loan). Multiply the sales price by the down payment percentage and subtract out the down payment from the sales price to arrive at the "base loan", however, if the loan amount exceeds the FHA loan limit, replace the base mortgage with the "maximum" FHA loan limit and subtract the limit from the sales price to arrive at the down payment.
Subtract the LOWER of calculation 1 or 2 to arrive at the required down payment.
What's a FHA loan?
These pages contains a variety of information on FHA home loans.
FHA Home Loan Limits
FHA mortgages have maximum loan amounts and the limits vary by county. The following links will redirect you to ancillary sites with the FHA loan limits.