Questions and Answers About FHA Up-Front Mortgage Insurance Premiums
January 14, 2026
What purpose does the Upfront Mortgage Insurance Premium serve?
The UFMIP acts as a financial safeguard for the lender. This one-time fee protects the mortgage provider if the borrower fails to make payments. It does not provide any coverage or protection for the homeowner.
How much does the UFMIP cost?
1.75 percent of the base loan amount.
Can I pay the premium in cash at closing?
Yes. Borrowers can pay the full 1.75 percent fee out of pocket during settlement. This method prevents the fee from increasing the total loan balance and reduces the interest paid over the life of the mortgage.
Is it possible to add the fee to my mortgage balance?
Yes. HUD 4000.1 regulations allow borrowers to finance the entire premium. Choosing this option lowers the cash required at closing time. However, it increases the monthly mortgage payment because the borrower pays interest on the financed UFMIP.
Can I pay half in cash and finance the rest?
No. FHA guidelines require an all-or-nothing approach. Borrowers must either pay the total amount in cash or finance the entire sum. The lender cannot accept partial payments for the UFMIP.
Can someone else pay the UFMIP for me?
"Interested parties" and family members can cover the cost through specific channels. Home sellers may contribute up to 6 percent of the sales price to cover closing costs, including the UFMIP. A lender can provide a credit to cover the fee, typically in exchange for a higher interest rate. And family members may provide gift funds to cover the premium if they provide a formal gift letter.
Does financing the UFMIP affect my maximum loan amount?
The FHA allows financed UFMIP to exceed standard Loan-to-Value (LTV) limits. The loan amount is calculated, and the UFMIP is added on top.
Do I get a refund if I pay off my loan early?
Borrowers who refinance into another FHA loan within 36 months may receive a partial credit toward the new premium. This credit disappears if you switch to a conventional loan or wait longer than three years to refinance.
Does paying the upfront fee cancel the monthly insurance charges?
No. The UFMIP and the annual Mortgage Insurance Premium (MIP) are separate requirements. Even if you pay the upfront fee in cash, you must still pay the monthly MIP installments included in your mortgage payment.
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