An ordinary 30-year FHA forward purchase loan has initial LTV of 85% and a case number assigned under the post-June 3, 2013 MIP duration rules. Does the 15% down payment eliminate annual mortgage insurance premiums?
Correct Answer
C) No: annual MIP remains required, with an 11-year duration at this initial LTV
C. A 15% down payment does not eliminate annual MIP here. The 85% initial LTV falls within the at-or-below-90% category. For the specified case-date rules, that category has eleven years of annual MIP rather than an immediate waiver. Scope and exceptions: This question concerns annual MIP under the stated rules, not every historical FHA loan or upfront-premium calculation. Paying off the loan ends future premiums; do not read the eleven years as an obligation after payoff. Source: Case numbers assigned on or after June 3, 2013 — https://entp.hud.gov/sfohlp/f17updbal.cfm
Why This Is the Correct Answer
C. A 15% down payment does not eliminate annual MIP here. The 85% initial LTV falls within the at-or-below-90% category. For the specified case-date rules, that category has eleven years of annual MIP rather than an immediate waiver. Scope and exceptions: This question concerns annual MIP under the stated rules, not every historical FHA loan or upfront-premium calculation. Paying off the loan ends future premiums; do not read the eleven years as an obligation after payoff.
Why the Other Options Are Wrong
Option A: FHA waives MIP at 20% down, on the same terms as a conventional loan
It imports a conventional PMI shortcut into this FHA question.
Option B: FHA charges MIP for 2 years and then removes it at any LTV
There is no flat two-year duration in the applicable table.
Option D: FHA waives MIP once the down payment reaches 10% of the price
Ten percent down changes the duration category, not immediate eligibility for a waiver.
Exam Tip
A lower FHA initial LTV can shorten annual MIP duration without eliminating it.
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