According to new FHA rules, how long must mortgage insurance for FHA loans over 90% LTV be paid?

Mortgage insurance for FHA loans with a loan-to-value (LTV) ratio greater than 90% must be paid for the entire duration of the loan term. This requirement ensures that the lender has protection against defaults for the life of the mortgage when the borrower has a higher level of financing compared to the value of the property.

Under FHA guidelines, this rule applies because loans with higher LTV ratios are considered riskier for lenders. The continuous mortgage insurance mitigates this risk by providing a financial safety net, helping maintain the stability of the lending system. As such, borrowers are required to maintain such insurance until they fully pay off the mortgage, rather than having the option to cancel it after a certain period or once a specific equity is achieved.

In contrast, other options either refer to timeframes or conditions that do not align with FHA lending rules. For example, mortgage insurance being canceled after a fixed number of years, or upon reaching a certain percentage of equity, does not apply to loans exceeding a 90% LTV. Understanding this key distinction is crucial for applicants and mortgage professionals in navigating FHA lending requirements effectively.