FHA Loan Program

The FHA Loan Program is a 3.5% down with 640 minimum credit score requirement and a minimum 5-year MI/MIP.  What this means to you as the home buyer is:

3.5% down – Minimum down payment required is 3.5% of Sale Price
     1)  Any Earnest Money that you are required to give to your realtor at the time of an accepted purchase contract will count towards your 3.5% down payment.
     2)  Appraisal Fee (Fixed fee of $450.00) collected at the time of your application will also count towards your 3.5% down payment.
 
If, for example, you are purchasing a $100,000 house, your minimum down payment required would be $3,500.00.  If your seller/realtor required you to put down $500.00 in earnest money on top of the $450.00 for your appraisal, your down payment would be lowered to $2,550.00.  Any cash payments you make that are included in you loan program will count towards your 3.5% down payment.
 
MI/MIP - Mortgage Insurance
     MI stands for Mortgage Insurance.  MIP stands for Mortgage Insurance Premium.  This is an insurance policy that is required by the government for any loan program that has a down payment of less than 20% of the sale price.  Because the down payment requirement on the FHA 203(b) program is only 3.5%, there is a Mortgage Isurance requirement.  The up front Mortgage Insurance Premium is financed into your loan with no cash requirement from you the home buyer.  The Mortgage Insurance Permium is included in your monthly payment for a minimum of 5 years.