How Long Do You Pay PMI in an FHA Loan?

The Federal Housing Administration (FHA) is part of the U.S. Department of Housing & Urban Development (HUD) and will be the most significant government insurer of mortgages. By securing mortgages on single-family, one- to buildings, manufactured homes and hospitals, financial lenders bear less danger when a borrower defaults on a loan. Neither FHA nor HUD loans cash to borrowersthey guarantee the loans made by creditors. The loans are awarded to borrowers via banks or savings and loan institutions.

About PMI

PMI stands for Private Mortgage Insurance. When a house was bought with less than a 20 percent down 19, PMI is required on mortgage loans. This insurance protects the lender. The borrower pays a percentage monthly of the total financed loan sum. FHA loans required a 3.5 percent down payment, requiring PMI to be compensated on the 96.5 percent loan-to-value quantity. Presently the monthly PMI is 0.55 percentage of the amount of the loan, however at October 5, 2010, the speed will be 0.77 percent.

Other Fees Associated With PMI

In addition to the insurance charge, there is an upfront mortgage insurance fee for FHA loans. The upfront mortgage insurance rate decreases from 2.25 to 1 percentage as of October 5, 2010. This charge is on the loan amount not on the selling costs of the house.

Automatic Cancellation

The Homeowner’s Protection Act of 1998 provides automatic cancellation of PMI once a homeowner has reached 22 percent equity in his house based on the initial purchase price. The cancellation additionally requires that the homeowner continues to be current on obligations an whole year. How much time it takes to reach 22 percent equity is contingent a homeowner qualified for and also the length of the loan. By way of example, a homeowner with a 6 percent interest rate who put down 5 percent will require to reach 10 1/2 years on a 30-year mortgage, or 22 percent equity on a mortgage.

Requesting Cancellation

Once their equity has reached 20 percent homeowners can request the cancellation of PMI. Other prerequisites may be set by lenders . Regardless of reaching the 20% equity minimal, to getting PMI canceled mortgage payments will lower a homeowner’s chances.


HUD does not regulate the authorities of PMI cancellation. Work with your mortgage lender about canceling your PMI payments. If you are experiencing difficulty getting the charges removed from your mortgage obligations, contact one of these institutions depending upon your creditor’s affiliation: Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), National Credit Union Administration (NCUA), Farm Credit Administration (FCA), Comptroller of the Currency (OCC) or the Federal Reserve Board.

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