Real Estate Math

A Mississippi buyer obtains an FHA loan with a 3.5% down payment on a $200,000 purchase price. The upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount. What is the UFMIP?

A$3,500
B$3,378✓ Correct
C$3,325
D$3,640

Explanation

Down payment = $200,000 × 3.5% = $7,000. Base loan = $193,000. UFMIP = $193,000 × 1.75% = $3,377.50 ≈ $3,378.

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