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Costs and Considerations

While FHA loans offer numerous advantages, it's important to consider the costs associated with them. FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The UFMIP is typically 1.75% of the loan amount, while the annual MIP ranges from 0.45% to 1.05%, depending on the loan term and amount. These costs can add up, so it's crucial to factor them into your budget when determining how much home you can afford.³