An MIP, or mortgage insurance premium, is the way that FHA 203(b) loan borrowers pay for FHA mortgage insurance. FHA MIP is designed to protect the lender in case the borrower defaults on their mortgage.
If you’re considering taking out a 203b loan to buy a home, your DTI, or debt-to-income ratio, is one of the most important metrics that FHA lenders will look at to determine your eligibility. DTI is calculated by taking a borrower’s monthly debts and dividing them by his or her monthly income.
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