March 27, 2013
A common question in any home loan situation is, “How long is my mortgage?”
This depends greatly on the type of loan you apply for, the term you agree upon, and how much you pay each month over the lifetime of the loan. In general, FHA mortgages are either 15-year or 30-year loans. The maximum amount of time you can be legally obligated to the original new purchase FHA home loan is 30 years.
According to the FHA official site, “The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples.”
Some types of refinancing (certain FHA Streamline Refinances without an appraisal, for example) do require shorter terms. Here are the FHA loan rules for Streamline Refinance loans and the maximum loan term as found in HUD 4155.1:
“The streamline refinance mortgage term is the lesser of
• 30 years, or
• the remaining term of the mortgage plus 12 years.”
It’s important to note that a borrower’s 30-year commitment to the original mortgage would change in the event he or she pays more than the minimum mortgage payment due each month–change in the sense that an early payoff can shorten the loan term.
There is no penalty for early payoff with an FHA home loan, so the borrower is free to pay more each month or whenever it’s felt necessary. Paying more can reduce the amount of time you spend making mortgage payments.
As mentioned above, the borrower’s loan term will also change when the mortgage is refinanced. The terms of your new mortgage depend on the nature of the refinancing–speak to a lender for more information on the type of refinance loan you’re interested in and what the commitment might be for the new loan.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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