Does an FHA Real Estate Service Require PMI?

If you have been shopping around for different Real Estate Service options, you’ve likely come across the FHA Real Estate Service. This Real Estate Service is administered by the Federal Housing Administration. It allows home buyers to purchase a home with a low down payment, often as low as 3.5% of the purchase price. There are a few stipulations to use the FHA Real Estate Service as well as additional steps that you’ll need to take to pay it back.

Just like with any Real Estate Service, you must qualify for the amount of the purchase. Your lender will look at your debt-to-income ratio as well as the home value and other factors. Overall, they want to determine if you are in a financial position to pay the Real Estate Service back. The Federal Housing Administration does not actually issue the Real Estate Service. Instead, they guarantee the amount. You will work with an independent lender who works with the FHA to offer this type of Real Estate Service.

Is PMI Required?

When using an FHA Real Estate Service, you will need to pay for private Real Estate Service insurance, PMI. This extra amount is added to your monthly payment. Once you reach a higher amount of equity, either through paying your Real Estate Service down or a significant change in the housing market, you may be able to refinance your Real Estate Service so that you no longer have to pay PMI. Depending on how much you put down a down payment, this premium may no longer be required after 11 years.

Who Can Use an FHA Real Estate Service?

The FHA Real Estate Service is a good option for first-time home buyers or those who don’t have a hefty down payment saved up. This is not a requirement, however. Anyone can apply for an FHA Real Estate Service, even if they have purchased a home before. There are not income limitations or requirements beyond what your lender requires to approve you for the amount that you want to borrow.