FHA's annual MIP is calculated as a percentage of the outstanding loan balance. For example, an outstanding loan balance of $200,000 with a 0.55% annual MIP (the standard pricing for most FHA-insured mortgages), would yield an annual MIP amount of $1,100.
The annual premium comes out to 0.55% for most borrowers who use FHA loans, but it can vary based on the loan amount and term.
This law created the Federal Housing Administration (FHA) that insured banks, mortgage companies, and other lenders, thereby encouraging the construction of new homes and the repair of existing structures. It was FDR's hope that the law would also spur employment in the construction industry.
For a 1 unit home (single family) the limits in California range from a standard limit of $524,225 up to a high cost limit of $1,209,750. FHA also has different loan limits based on the number of units in the home. Below are the 2025 FHA loan limits for 1- 4 unit properties in CA for each county.
The agency also extended the repayment period of home mortgages from 5–10 years to 20–30 years. The resulting reductions in monthly mortgage payments helped to prevent foreclosures, often made buying a home cheaper than renting, and allowed families with stable but modest incomes to qualify for a home mortgage.
New Deal legislation
The Home Owners Loan Act established a corporation that refinanced one of every five mortgages on urban private residences. Other bills passed during the Hundred Days, as well as subsequent legislation, provided aid for the unemployed and the working poor and attacked the problems of agriculture…
What is one ongoing result of the New Deal? People can rely more on the federal government during times of economic distress.
By refinancing to a conventional loan once you have 20% equity, you can eliminate FHA MIP and you won't be subject to PMI. Or, you could refinance into a conventional loan with PMI now.
The National Association of Realtors: NAR's quarterly outlook has 30-year mortgage rates ending 2024 at 6.1% and bottoming out around 5.8% toward the end of 2025. After that, we could see rates tick back up to 6.1% in 2026.
The upfront fee is currently 1.75% of the initial loan amount and is rolled into the amount financed. The annual mortgage insurance premium can vary based on the loan amount and down payment. Please find the calculation examples on the FHA Details page here.
FHA Loan: Cons
Here are some FHA home loan disadvantages: An extra cost – an upfront mortgage insurance premium (MIP) of 2.25% of the loan's value. The MIP must either be paid in cash when you get the loan or rolled into the life of the loan. Home price qualifying maximums are set by FHA.
In summary, here's what we found: You need to make at least $54,000 per year to afford a $200,000 house. You need to make at least $81,000 per year to afford a $300,000 house. You need to make at least $109,000 per year to afford a $400,000 house.
A current annual premium is what it sounds like — the current amount a member pays each year for a health insurance policy.
1246, enacted June 27, 1934, also called the Better Housing Program, was part of the New Deal passed during the Great Depression in order to make housing and home mortgages more affordable. It created the Federal Housing Administration (FHA) and the Federal Savings and Loan Insurance Corporation (FSLIC).
The Subsistence Homesteads Division (or Division of Subsistence Homesteads, SHD or DSH) of the United States Department of the Interior was a New Deal agency that was intended to relieve industrial workers and struggling farmers from complete dependence on factory or agricultural work.
The program included abolition of child labor, supporting higher wages for all workers, and government recognition of the right of workers to organize. Many of these items were already under consideration by the Administration but the conference gave added thrust to them.
An FHA loan is a mortgage insured by the Federal Housing Administration. FHA loans are helpful for buyers with limited savings or lower credit scores.
FHA loans have the reputation of having strict requirements for appraisals and inspections. The FHA has what they call 'Minimum Property Requirements,' if a property doesn't meet even one of them, financing falls through. This is above and beyond what a typical appraisal does – determine the property's market value.
FHA primarily operates from its self-generated income. We collect mortgage insurance premiums from borrowers via lenders. We use this income to operate our mortgage insurance programs for the benefit of homebuyers, renters, and communities.
Reduce your loan term
Making the equivalent of two extra mortgage payments per year, for example, will knock off 9 years and 4 months from the total term of your loan. A shorter mortgage term also means that you'll own your house outright sooner.