Mortgage insurance is an amount charged to the homeowner each month at the rate of .5 percent per year of the total loan amount. An upfront mortgage insurance premium of 1.5 percent is also charged by FHA. If mortgage loan is of 15 years and less and the loan to value ratios are 89.99 percent and below, the annual mortgage insurance premium is not charged. In other cases, it will be canceled as per following situations:
Mortgages With Terms 15 Year Or Less
For 15 years and less mortgages, whereby Loan to Value ratio is 90 percent and greater, annual premiums will be canceled when the Loan to Value ratio reaches 78 percent regardless of the amount of time the mortgagor has paid the premiums.
Mortgages With Terms More Than 15 Years
For more than 15 years mortgages, the annual mortgage insurance premiums will be canceled when the Loan to Value ratio reaches 78 percent, provided the mortgagor has paid the annual premium for at least 5 years.
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