Understanding the FHA Mortgage Insurance Premium (MIP)

The FHA Mortgage Insurance Premium is an important part of every FHA loan.

There are actually two types of Mortgage Insurance Premiums associated with FHA loans:

1.  Up Front Mortgage Insurance Premium (UFMIP) – a one time mortgage insurance fee financed into the total loan amount at the initial time of funding.

2.  Annual Mortgage Insurance Premium – this is actually paid monthly along with Principal, Interest, Taxes and Insurance.

Conventional loans that are higher than 80% Loan-to-Value also require mortgage insurance, but at a relatively higher interest rate than FHA Mortgage Insurance Premiums.

Mortgage Insurance is a very important part of every FHA loan since a loan that only requires a 3.5% down payment is generally viewed by lenders as having more risk than one with 20% down payment.

Without FHA around to insure the lender against a loss if a default occurs, low down payment loan programs such as FHA would not exist or be much more costly.

Calculating FHA Mortgage Insurance Premiums:

FHA Up Front Mortgage Insurance Premium (UFMIP)

UFMIP varies based on the term of the loan and Loan-to-Value.  For most FHA loans, the UFMIP is equal to 1.75%  of the base FHA loan amount and paid directly to HUD.

THE UFMIP must be financed into the loan unless paid entirely in cash.  The UFMIP is not refundable unless refinancing into a new FHA loan.

For Example:

>> If John purchases a home for $200,000 with 3.5% down, his base FHA loan amount would be $193,000

>> The UFMIP of 1.75% is multiplied by $193,000, equaling $3,377.50

>> This amount is then added to the base loan, for a total FHA loan amount of $196,377.50

FHA Annual Mortgage Insurance Premium (MIP):

The annual FHA Mortgage Insurance Premium is base don the LTV, base loan amount, and term of the loan.

All MIP's in this table are effective for FHA case files assigned after January 26, 2015.
Base Loan Amt.LTVMIPMIP Duration
More than 15 Years
$625,500 or more95% or more105 bpsMortgage Term
$625,500 or more95% or less100 bpsMortgage Term
$625,500 or more90% or less100 bps11 Years
$625,500 or less95% or more85 bpsMortgage Term
$625,500 or less95% or less80 bpsMortgage Term
15 Years or Less
$625,500 or more90% or more95 bpsMortgage Term
$625,500 or more78% - 90% or less70 bps11 Years
$625,500 or more78% or less45 bps11 Years
$625,500 or less90% or more70 bpsMortgage Term
$625,500 or less90% or less45 bps11 Years

*Every effort is made to post valid, up to date information. Mortgage guidelines and programs constantly change. Therefore, the content of each post should be viewed and used as a starting point. Please contact us to verify current guidelines pertaining to this post or for more information.



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