How much is the upfront mortgage insurance for an FHA loan?

For FHA loans, the upfront mortgage insurance premium (UFMIP) is set at 1.75% of the loan amount. This fee is charged at closing and can be rolled into the mortgage, allowing borrowers to finance it rather than pay it out of pocket upfront. The purpose of this premium is to protect lenders against losses in the event of loan default, given that FHA loans are designed to support lower-income borrowers and those with less-than-perfect credit histories. This initial premium helps sustain the FHA's insurance fund which guarantees these loans.

The other percentages listed do not reflect the correct rate for the upfront mortgage insurance on FHA loans and are instead applicable to other loan types or specific scenarios within the FHA program. Understanding this rate is crucial for potential FHA borrowers, as it affects the overall cost of obtaining a loan through this program.