A buyer in Texas is using an FHA loan with a 3.5% down payment. The FHA charges two types of mortgage insurance. Which of the following correctly identifies them?
Correct Answer
C) An upfront mortgage insurance premium (UFMIP) paid at closing and an annual mortgage insurance premium (MIP) paid monthly
FHA charges two types of mortgage insurance: (1) an upfront MIP (UFMIP) of 1.75% of the base loan amount, typically financed into the loan, and (2) an annual MIP paid in monthly installments, currently 0.55% for most 30-year loans with LTV above 95%.
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