October 19, 2016
One of the most common questions about FHA mortgage payments is naturally, “How much will I have to pay?” And the answer is not as easy as you might think since there are a variety of factors that go into calculating the monthly mortgage payment.
FHA loan limits, the amount of the loan the FHA will insure, don’t include the Up Front Mortgage Insurance Premium (UFMIP), for example. So you can’t simply divide the amount of your loan limit and divide by the number of mortgage payments you plan to make. In addition to UFMIP, there are other things to consider.
For example, is the borrower planning on an FHA Energy Efficient Mortgage (EEM)? This option allows the addition of extra funds for approved upgrades or improvements to the home, and that extra money added to the loan amount will change the monthly mortgage payment.
In fact, there is a list of items the lender must use in order to calculate the monthly mortgage payment. This list is found in HUD 4000.1 and includes (but may not be limited to) the following as listed on page 311:
“The total Mortgage Payment includes:
-principal and Interest;
-real estate taxes;
-hazard insurance;
-flood insurance as applicable;
-Mortgage Insurance Premium;
-HOA or condominium association fees or expenses;
-Ground Rent;
-special assessments;
-payments for any acceptable secondary financing; and
-any other escrow payments.”
As you can see, there is a list of items that must be considered when making the monthly mortgage payment calculation. That’s one reason why it’s a very good idea to take some extra time to plan and budget for your new loan. Anticipating these expenses and how they affect your monthly payment is important.
Some borrowers might not be able to anticipate all the expenses associated with an FHA mortgage, which is why it’s a good idea to do some pre-purchase planning with the help of a qualified housing counselor. Did you know the FHA offers referrals to local, HUD-approved housing counselors in or near your local area? You can take advantage of this by calling the FHA directly at their toll-free number, 1-800 CALL FHA.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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