# FHA - how to calculate FHA mortgage insurance and PMI

A standard calculator

A piece of paper/pen

A little patience

An understanding of MI factor

An understanding of UFMIP

*Loan amount multiplied by to monthly MI factor divided by 12 equals your monthly MI payment.*

MI factor is the number used to calculate the sum. FHA rules change but as of now these are the guidelines.

If you have a down payment less than 5% then your monthly MI factor is .0090 (This will increase soon). If you have 5% or greater down payment your monthly MI factor is .0085

UFMIP is a one time payment to FHA. It stands for Up Front Mortgage Insurance Premium. Easy way to think of it is similar to buying or leasing

a car. You put a down payment and then have monthly payments. UFMIP is equal to 1% of the loan amount.

Purchase price $300,000 - 3.5% down payment ($10,500) = $289,500 loan amount

Base loan amount - $289,500 X .0090 = 2,605.50. Divide by 12 = $217.13

The monthly FHA MI payment in this scenario would be $217.13 per month.

If the down payment is 5% or greater then use .0085 instead of .0090

Your loan amount wil be different. This is because in addition to the monthly MI payment FHA also charges a one time Up Front Mortgage Insurance Premium of 1%.

Apply UFMIP - Loan amount $289,500 X 1% (2,895) = $292,395. This is your new total loan amount.

Source: activerain.trulia.com

Category: Credit

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