Finance
A Texas borrower with an FHA loan has paid their mortgage for 11 years and the loan balance is now at 78% of the original purchase price. The FHA MIP (mortgage insurance premium) on this loan:
AAutomatically cancels at 78% LTV
BRemains for the life of the loan since the borrower's original down payment was less than 10%✓ Correct
CCancels after 5 years regardless of LTV
DCan be removed upon the borrower's request anytime after 5 years
Explanation
For FHA loans originated after June 2013 with less than 10% down payment, MIP remains for the life of the loan regardless of LTV. For borrowers with 10% or more down, MIP cancels at 11 years. This differs from conventional PMI, which cancels at 80% LTV (Homeowners Protection Act). This is a significant cost advantage of conventional vs. FHA loans for long-term borrowers.
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