GUIDE TO SINGLE FAMILY HOME MORTGAGE INSURANCE

The costs associated with a loan can vary significantly from one lender to another. It pays to comparison shop for a mortgage. The most important factors to consider in comparing loans are:

	Interest Rate.
	Discount points.
	Closing costs and other fees, such as charges to originate the loan, commitment fees to "lock in" the mortgage terms you and the lender have agreed to for a certain period, and mortgageinsurance premiums (MIP).
	Annual Percentage Rate.

All of these factors are negotiated between you and your lender. HUD does not establish minimum or maximum amounts for the interest rate, discount points, or most processing fees you pay the lender.

Monthly Payment for Principal and Interest on a 30-Year Fixed Rate, Level Payment Mortgage

                         Interest Rate
     Mortgage 
     Amount    7.0%      8.0%      9.0%      10.0%

     $40,000   266.40    293.60    322.00    351.20

     $50,000   333.00    367.00    402.50    439.00

     $60,000   399.60    440.40    483.00    526.80

     $70,000*  466.20    513.80    563.50    614.60

     $80,000*  532.80    587.20    644.00    702.40

     $90,000*  599.40    660.60    724.50    790.20

Your monthly payment will be determined by the amount of your mortgage, the interest rate, and the length of the loan. A longer mortgage term will lower your monthly payment, but it will increase the total amount of interest you pay. For example, if you borrow $50,000 with an interest rate of 10 percent, your payment to principal and interest will be:

     Monthly   Term Total
               Payment

     $537.50   15 years  $96,750

     $439.00   30 years  $158,040

FHA offers five GPM payment plans, which vary in the rate of payment increases and the number of years over which the payments will increase. The greater the rate of increase or the longer the period of increase, the lower the mortgage payments in the early years. For example:

          Increase in    Frequency of
     GPM Plan  Monthly Payments    Increase

     Plan 1    2.5 percent    First 5 years

     Plan 2    5 percent      First 5 years

     Plan 3    7.5 percent    First 5 years

     Plan 4    2 percent      First 10 years

     Plan 5    3 percent      First 10 years

     Year 203(b)    GPM Loan

     1    526.80    400.22

     2    526.80    430.24

     3    526.80    462.50

     4    526.80    497.20

     5    536.80    534.49

     6    526.80    574.57

     Remaining
     Payments  526.80    574.57

These loans are used to finance alterations, repairs, or improvements to existing dwellings housing up to 11 families in a redevelopment area as defined in Section 220. The mortgage limit is the lessor of:

	HUD's estimate of the cost of improvements;
	$40,000; or
	12,000 for each family unit ($17,400 in high cost areas).

Section 221(d)(2)
Home Mortgage Insurance for Low and Moderate Income Families
(Federal Domestic Assistance Code 14.120)

This program may be used by low- to moderate-income families to finance the purchase of a home. It may also be used by families displaced by urban renewal, code enforcement, condemnation, etc., or as a result of the President declaring an area a major disaster. The mortgage limit for a one-family unit is $31,000. This amount may be increased up to $36,000 in high cost areas determined by the Department.

Section 222
Mortgage Insurance for Service Members
(Federal Domestic Assistance Code 14.166)

You may use Section 222 to purchase a home if you are on active duty with the Department of Transportation (Coast Guard) or the Department of Oceanic and Atmospheric Administration). While there is no upfront mortgage insurance premium, the employing agency pays the monthly mortgage insurance premium directly to HUD as long as you remain in active service. The employing agency must issue a certificate of eligibility.

Section 223(e)
Miscellaneous Housing Insurance
(Federal Domestic Assistance Code 14.123)

You may use Section 223(e) to purchase a property in an older, declining urban area where normal requirements for mortgage insurance cannot be met. Only HUD can determine whether a property is eligible for Section 223(e) mortgage insurance. This program is intended to supplement other HUD mortgage insurance programs.

Section 237
Mortgage Insurance for Special Credit Risks
(Federal Domestic Assistance Code 14.140)

Low- and moderate-income families who are unable to meet the normal underwriting standards of HUD's other single family programs because of their credit history may use Section 237 to finance the purchase of new, existing, or substantially rehabilitated single-family homes or condominiums.

To qualify for a Section 237 mortgage, you must obtain counseling assistance from a HUD-approved counseling agency. These agencies provide budget, debt-management, and related counseling services to families as needed.

This program is limited by law to mortgages up to $18,000 ($21,000 in high cost areas).

Section 238(c)
Mortgage Insurance in Military Impacted Areas
(Federal Domestic Assistance Code 14.165)

You may use Section 238(c) to finance the repair, rehabilitation, or purchase of a home near any military installation in a federally impacted area. The Secretary of Defense must certify the need for additional housing in the area.

Section 240
Purchase of Fee-Simple Title from Lessors
(Federal Domestic Assistance Code 14.130)

You may use Section 240 to finance the purchase of fee simple title if your home is on leased land. The maximum mortgage amount is the lessor of:

	$10,000 per family unit ($30,000 if the property is in Hawaii);
	The cost of purchasing the fee simple title; or
	An amount that does not exceed the maximum mortgage insurable under Section 203(b).