Up-front mortgage insurance is an insurance premium that is collected, typically on Federal Housing Administration (FHA) loans, at the time the loan is initially made. Though similar, it is not quite the same as private mortgage insurance (PMI), which is collected by a conventional private mortgage lender each month when a buyer’s down payment on a home is less than 20% of the purchase price. Up-front mortgage premiums are added to a pool of money that is used to help entities, such as the FHA, insure loans for certain borrowers.
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