Real Estate Math

A Missouri buyer makes a 5% down payment on a $320,000 home and pays an FHA upfront MIP of 1.75%. The upfront MIP is based on the:

APurchase price
BLoan amount✓ Correct
CAppraised value
DDown payment

Explanation

FHA upfront MIP = 1.75% of the base loan amount. Down payment = $320,000 × 5% = $16,000. Loan = $304,000. Upfront MIP = $304,000 × 1.75% = $5,320.

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