FHA Loan Questions and Help

[Christian Kama]

Can't really find an answer for this and I hope it makes sense but when applying for a FHA loan assuming you are approved, do you have to pay more for the P&I since your down payment is so low (3.5% or 5%DP) or does it just depend on the bank?

Thank you

[Scott Miyazaki]

Hi Christian. I'll try to answer your question. The P&I you pay will be based off of the loan amount and interest rate. An FHA loan and a Conventional loan can have the same interest rate and therefore the same P&I payment. However, with 3.5% down, or in other words a LTV of more than 80% will require Mortgage Insurance(PMI; also required with conventional loans with less than 20% down) as well as an Up Front Mortgage Insurance Premium(UFMIP, this is specific to FHA loans) of 1.75%.

To recap, you won't necessarily have to pay more for P&I just because you're taking an FHA loan, however payments will have an added insurance cost.