Editing Federal Housing Administration (section)

=== FHA mortgage insurance ===
FHA insurance payments consist of two components: the upfront mortgage insurance premium (UFMIP) and the annual premium, which is paid monthly and referred to as the mutual mortgage insurance (MMI).<ref name=":4">{{Cite web |title=FHA Requirements: Mortgage Insurance for 2022 |url=https://www.fha.com/fha_requirements_mortgage_insurance |publisher=Federal Housing Administration, U.S. Department of Housing and Urban Development |access-date=May 9, 2022}}</ref> The UFMIP is a mandatory payment that can be paid in cash at the time of closing or included in the loan amount.<ref name="auto"/> The annual Mortgage Insurance Premium (MIP) for FHA-insured mortgages varies depending on factors such as the base loan amount, loan-to-value (LTV) ratio, and loan term. For a typical 30-year mortgage, the annual MIP rate ranges from 0.80% to 1.05%. Homebuyers who opt for a 15-year mortgage experience lower MIP rates, ranging from 0.45% to 0.95%. For loans with FHA Case Numbers assigned on or after June 3, 2013, the duration of MIP payments is determined by factors including loan term, LTV ratio, and previous payment history. The upfront mortgage insurance premium (UFMIP) is a fixed 1.75% of the base loan amount and is mandatory, payable in cash at closing or financed into the loan. These MIP payments are a fundamental component of FHA mortgage insurance, serving to protect lenders from potential losses.<ref name=":4" />

In the present day, approximately 46% of first-time homebuyers in the United States utilize FHA loans for their home purchases. Notably, 1 in 16 FHA loan borrowers maintains a credit score below 600, while the average credit score among first-time FHA loan borrowers stands at 677. These first-time homebuyers account for 82% of all FHA purchase loans. Additionally, 23% of all homebuyers opt for an FHA loan, with 28% of those aged 37 or younger choosing this financing option. Among the challenges faced by homebuyers, 13% of all buyers and 24% of those under the age of 37 find the down payment requirement to be the most daunting task. On average, the down payment amount is $6,624. FHA borrowers have an average debt-to-income ratio of 40.34%, and the typical FHA loan amount is $191,650. It's worth noting that a minimum credit score of 580 with a down payment of 3.5% is required to qualify.<ref>{https://www.hud.gov/buying/loans#:~:text=Buying%20your%20first%20home%3F,on%201%2D4%20unit%20properties.}</ref>