Whats the reasoning behind FHA mortgage insurance?
Most conventional loans require borrowers to have 10% to 20% of the home’s value for a down payment. FHA-insured loans require as little as 3.5% of the home’s value as a down payment. That said, there is more flexibility for the borrower because it requires a minimal cash investment to close. The cost of the mortgage insurance is calculated within the monthly payment. In many cases, when the loan-to-value on the home drops to 78% or the loan is five years old (whichever is longer), the cost of the insurance is removed.
