FHA Mortgage Insurance Premium (MIP)
What Is FHA Mortgage Insurance Premium (MIP)?
FHA Mortgage Insurance Premium (MIP) is a required cost for all FHA loans, helping protect lenders in case of borrower default. This makes FHA loans more accessible to individuals with lower credit scores or smaller down payments. At Simply Approved Mortgages, we help you understand MIP and its impact on your loan.
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Disclaimer: Advertised rates and fees depend on borrower qualifications and market fluctuations.
How Does FHA Mortgage Insurance Premium Work?
FHA Mortgage Insurance Premium is split into two components:
Upfront Mortgage Insurance Premium (UFMIP):
- Equal to 1.75% of the total loan amount.
- Paid at closing or rolled into the loan balance.
Annual Mortgage Insurance Premium (MIP):
- Charged annually but paid monthly.
- Rates vary based on your loan amount, term, and Loan-to-Value (LTV) ratio.
For example, on a $250,000 loan, UFMIP would be $4,375, and annual MIP would cost $1,375, or approximately $114.58 per month.
At Simply Approved Mortgages, we operate with a 1.5% fee, significantly below the industry standard. This ensures more savings for borrowers without compromising service quality.
Disclaimer: Simply Approved Mortgages complies with all state and federal licensing requirements that we are licensed in.
FHA MIP Rates
The FHA sets annual MIP rates depending on the loan amount and term:
| Loan Term | Loan Amount ≤ $625,500 | Loan Amount > $625,500 |
|---|---|---|
| 15-Year Term | ||
| LTV ≤ 90% | 0.15% | 0.40% |
| LTV > 90% | 0.40% | 0.70% |
| 30-Year Term | ||
| LTV ≤ 90% | 0.50% | 0.80% |
| LTV > 90% | 0.55% | 0.85% |
How Long Do You Pay FHA MIP?
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Recent MIP Reductions and Savings
Recent MIP Reductions and Savings
In March 2023, the U.S. Department of Housing and Urban Development (HUD) implemented a 35% reduction in Annual MIP rates, making FHA loans more affordable.
Impact of the Reduction:
- 700,000 FHA borrowers saved approximately $600 million collectively.
- The average borrower saved $876 annually in mortgage payments.
Why Simply Approved Mortgages Stands Out
Lower Fees, Bigger Savings:
With our industry-leading 1.5% fee, compared to the standard 2.75%, we save you thousands while offering competitive rates tailored to your needs. Learn More.
Expert Guidance:
Our team of seasoned professionals is dedicated to simplifying the mortgage process, providing personalized solutions, and ensuring you feel confident every step of the way.
Transparent and Trustworthy:
We prioritize honesty and clarity. From disclosing every detail upfront to ensuring no hidden surprises, we build trust through our commitment to your financial success.
Frequently Asked Questions About FHA MIP
Can I avoid paying FHA MIP?
No, all FHA loans require MIP. However, refinancing into a conventional loan can eliminate future MIP payments.
How does refinancing impact FHA MIP?
Refinancing to a conventional loan can eliminate MIP entirely. Refinancing into another FHA loan may qualify you for a partial UFMIP refund.
How much can MIP add to my monthly payment?
MIP adds a percentage of the loan amount annually, divided into monthly payments. For example, on a $250,000 loan, MIP could add about $114.58 per month.
What happens to my MIP if I sell my home?
MIP payments end when the loan is paid off, whether through selling the home or refinancing.
Comparing FHA MIP to Private Mortgage Insurance (PMI)
Comparing FHA MIP to Private Mortgage Insurance (PMI)
| Feature | FHA MIP | PMI |
|---|---|---|
| Applies To | FHA loans only | Conventional loans |
| Upfront Premium | 1.75% of loan amount | None |
| Monthly Premium | Based on loan term and LTV | Based on down payment and credit |
| Cancellation | Typically not cancelable | Cancelable at 78% LTV |
While FHA MIP is non-cancelable for loans with less than 10% down, PMI can often be removed once you build sufficient equity in your home.
Get Started With Our Home Affordability Calculator
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