Lenders have calculations for the amount of hazard insurance required for a loan as a minimum requirement. However, we recommend that you discuss adequate coverage with your insurance agent so that you feel properly covered.

Answer: Fannie Mae has a very specific section regarding how to determine the amount of hazard insurance coverage, complete with steps and an example. Please see below. It should answer all your questions. Freddie follows the same requirements. I believe, based on your scenario, that you would follow steps 2, 2A and 2B. Reference: B7-3-03, […]

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