FHA Home Loan Utah

An FHA mortgage is a home loan that is insured by the Federal Housing Administration. It is important to note that FHA does not lend money and that it is actually private lending institutions such as banks and credit unions that do the actual lending. FHA’s role is to insure the mortgage; this means FHA guarantees to the lender that they will pay off the loan in the event the borrower defaults (breaks their obligation to pay).

There are several benefits in choosing an FHA mortgage.  Some of the benefits include lower down payments, more relaxed underwriting, higher debt to income ratios, and Hybrid ARM options that cannot adjust as much as conventional mortgages.

No, FHA does not offer interest-only loans.

Yes, mortgage insurance is required to obtain an FHA home loan. The lender will collect the Upfront Mortgage Insurance Premium (UFMIP) at closing and sends it to FHA. If the borrower defaults on the loan, FHA uses the premium to help in paying the loan off.   Additionally, you will have to pay a monthly premium as part of your housing payment.  All 30 year FHA mortgages require this monthly premium for a minimum of 5 years regardless of loan to value.  Some FHA loans, such as a 15 year fixed condo loans, do not require monthly mortgage insurance. 

When you close on your loan, the upfront Mortgage Insurance Premium (UFMIP) is collected in an amount equal to 1.75% of the loan amount for most FHA loan mortgages.  This premium is almost always included in the actual loan amount so you do not have to pay for it out of pocket.  For example,  a loan amount of $130,000 requires upfront MIP of $2,275.   Additionally, for loans with a term greater than 15 years and a loan-to-value ratio of 95% or more, annual MIP is also owed in the amount of 0.55% of the loan amount, divided into monthly payments.   For example: a loan amount of $130,000 requires a monthly MIP of $59.58/month.  Loans with a loan to value less than 90% pay a reduced mortgage insurance premium of .50%.