FHA and VA mortgage insurance: Phoenix Arizona mortgages and real estate loans

Mortgage Insurance for Government Loans

FHA Home Loans:

Similar to conventional home loans, FHA insured mortgages require mortgage insurance. The mortgage insurance, referred to as mutual mortgage insurance (MMI), charges 0.5% per year of the loan amount. In addition to the mutual mortgage insurance that is charged to the home owner each month, FHA charges an upfront mortgage insurance premium (MIP) ranging from 1.75% for first time home buyers to 2.25% for 30 year fixed rate mortgages. It is important to note that any unused portion of the upfront MIP may be refunded within the first 84 months of the loan.

Beginning January 1, 2001, the upfront mortgage insurance premium charged by FHA will be be reduced to 1.50% of the loan amount. Furthermore, the monthly mortgage insurance payment will automatically be cancelled when the outstanding principal balance reaches 78% of the original purchase price (provided that the monthly mortgage insurance payments have been made for a minimum of 5 years for 30 year loans). 15 year mortgages where the home buyer makes a down payment greater than 10% of the purchase price will not have to pay the monthly mortgage insurance.

The following is a table of the upfront MIP and monthly mortgage insurance percentages for FHA home loans:

For 30 year loans originated before January 1, 2001

Upfront MIP	Down Payment	Monthly MI
2.25%	4.99% or less	0.50%
2.25%	5% to 10%	0.50%
2.25%	10.01% or more	0.50%

For 30 year loans originated after January 1, 2001

Upfront MIP	Down Payment	Monthly MI
1.50%	4.99% or less	0.50%
1.50%	5% to 10%	0.50%
1.50%	10.01% or more	0.50%

For 15 year loans originated before January 1, 2001

Upfront MIP	Down Payment	Monthly MI
2.0%	4.99% or less	0.50%
2.0%	5% to 10%	0.50%
2.0%	10.01% or more	0.50%

For 15 year loans originated after January 1, 2001

Upfront MIP	Down Payment	Monthly MI
1.50%	4.99% or less	0.50%
1.50%	5% to 10%	0.50%
1.50%	10.01% or more	0%

VA Home Loans:

The U.S. Department of Veteran's Affairs (VA) guarantees 25% of the loans by qualified lenders to eligible veterans. This guarantee negates the need for any monthly mortgage insurance payments.

However to cover the costs of the program, VA charges a funding fee for each loan (unless the veteran is a qualifying disabled veteran) which varies with the down payment, the type of veteran, and if the loan is a purchase, rate/term refinance or cash-out refinance.

The following table breaks down the funding fee charged by VA:

First time use, purchase of an eligible property

Down Payment	Active Duty	Reserves/NG
0% to 4.99%	2.00%	2.75%
5% to 9.99%	1.50%	2.25%
10% +	1.25%	2.00%

Second time use, purchase of an eligible property

Down Payment	Active Duty	Reserves/NG
0% to 4.99%	3.00%	3.00%
5% to 9.99%	1.50%	2.25%
10% +	1.25%	2.00%

Cash-out Refinance: 3.00% Funding Fee

The funding fee does not have to be paid by veterans receiving VA compensation for service-connected disabilities, or who but for the receipt of retirement pay would be entitled to receive compensation for service-connected disabilities, or surviving spouses of veterans who died in service or from a service-connected disability