Unfortunately, yes. The FHA 203k loans require mortgage insurance. Borrowers pay both the up front mortgage insurance premium and the monthly mortgage insurance cost.
The upfront and monthly premiums are paid to the US Treasury on behalf of the Federal Housing Administration (FHA). The FHA uses the accumulated premiums to buy back defaulted FHA insured loans from FHA approved lenders. Because of the Federal backing, mortgagee lenders are more likely to extend loans to applicants who would not otherwise qualify for a mortgage.
Currently, the "upfront" funding fee is 1.75% of the 203K mortgage (which includes the rehabilitation costs). In addition to the upfront program funding fee, the borrower pays a monthly mortgage insurance fee in with their mortgage payment.
The monthly cost depends on the down payment term and loan amount.
| Monthly Mortgage Insurance (MIP) Calculation | |||||
| Loan Term greater than 15 years (i.e 30 years) | |||||
| Base Loan Amount | LTV | Effective | Annual MIP | ||
| ≤ $625,500 | ≤ 95.00% | 1/26/2015 | 0.80% | ||
| ≤ $625,500 | > 95.00% | 1/26/2015 | 0.85% | ||
| > $625,500 | ≤ 95.00% | 1/26/2015 | 1.00% | ||
| > $625,500 | > 95.00% | 1/26/2015 | 1.05% | ||
| Loan term less than or equal to 15 Years with loan to value above 78% | |||||
| Base Loan Amount | LTV | Effective | Annual MIP | ||
| Any loan amount | < 78.00% | 6/3/2013 | 0.45% | ||
| ≤ $625,500 | 78.01% - 90.00% | 4/1/2013 | 0.45% | ||
| ≤ $625,500 | > 90.00% | 4/1/2013 | 0.70% | ||
| > $625,500 | 78.01% - 90.00% | 4/1/2013 | 0.70% | ||
| > $625,500 | > 90.00% | 4/1/2013 | 0.95% | ||
Use the FHA funding fee and monthly mortgage calculator for an estimate
REFERENCE: http://www.anytimeestimate.com/FHA/much-fha-mortgage-insurance.htm
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