Just a quick reminder that FHA mortgage loans are not conventional mortgages. FHA loans are backed by the government and come with different rules.
You don’t have to pay PMI with an FHA loan, but you do have to pay something similar: MIP (aka mortgage insurance premium).
FHA loans require mortgage insurance. Period. It doesn’t matter how large or small your down payment is. The cost of MIP can range between 0.45% – 1.05%. The percentage you pay will depend on the total amount of your loan, the loan’s repayment length and your loan-to-value (LTV) ratio.
Now, this hard and fixed MIP rule does come with an exception. You can cancel MIP fees on FHA loans taken out after June 4, 2013 – depending on the size of your down payment. If you put less than 10% down, you’ll pay FHA MIP every month until the mortgage is paid off. If you put down 10% or more, your MIP payments will end after 11 years.