Mortgage Insurance (MIP)
FHA loans allow you to finance up to 96.5% of the purchase price of your new home. That makes it an attractive option for many homebuyers, but also puts FHA-approved lenders at risk to lose a lot of money in the instance that a borrower defaults on their loan. To help protect lenders from this possibility and continue offering high-risk borrowers such flexible loans, the FHA mandates a Mortgage Insurance Premium (MIP).
FHA Mortgage Insurance Premium
Borrower's pay the FHA's mortgage insurance premium as part of the monthly payments to lenders. Your annual MIP cost—and how long you have to continue paying it—varies based on a few factors: your loan's term length, your loan-to-value ratio, as well as when you received your loan. For example, FHA loans with terms of 15 years or less qualify for reduced MIP, as low as 0.45%.
2024 MIP Rates for FHA Loans Over 15 Years
If you take out a typical 30-year mortgage or anything greater than 15 years, your annual mortgage insurance premium will be as follows:
| Base Loan Amount | LTV | Annual MIP |
|---|---|---|
| ≤ $726,200 | ≤ 90% | 50 bps (0.50%) |
| ≤ $726,200 | > 90% but ≤ 95% | 50 bps (0.55%) |
| ≤ $726,200 | > 95% | 55 bps (0.55%) |
| > $726,200 | ≤ 90% | 70 bps (0.70%) |
| > $726,200 | > 90% but ≤ 95% | 70 bps (.70%) |
| > $726,200 | > 95% | 75 bps (.75%) |
2024 MIP Rates for FHA Loans Up to 15 Years
Homebuyers who can afford to pay off their loans quicker and opt for a shorter term, such as a 15-year mortgage, will benefit from lower mortgage insurance premiums, as follows:
| Base Loan Amount | LTV | Annual MIP |
|---|---|---|
| ≤ $726,200 | ≤ 90% | 15 bps (0.15%) |
| ≤ $726,200 | > 90% | 40 bps (0.40%) |
| > $726,200 | ≤ 78% | 15 bps (0.15%) |
| > $726,200 | > 78% but ≤ 90% | 40 bps (0.40%) |
| > $726,200 | > 90% | 65 bps (0.65%) |
How Long Will You Pay the MIP?
For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP, which is the time at which you will pay for FHA Mortgage Insurance Premiums on your FHA loan. They are as follows:
| Term | LTV% | Duration |
|---|---|---|
| ≤ 15 years | ≤ 78% | 11 years |
| ≤ 15 years | > 78% but ≤ 90% | 11 years |
| ≤ 15 years | > 90% | Mortgage Term |
| > 15 years | ≤ 78% | 11 years |
| > 15 years | > 78% but ≤ 90% | 11 years |
| > 15 years | > 90% | Mortgage Term |
Upfront Mortgage Insurance Premium
In addition to the MIP, the FHA also requires that all borrowers pay an upfront mortgage insurance premium (UFMIP) at the closing. This amounts to 1.75% of the borrowed amount. So, if you were to borrow $250,000, you'd pay a premium of $4,375. typically ranges between 0.80% and 0.85% of the borrowed amount, depending upon your LTV. There's a table on the Department of Housing and Urban Development website that shows exactly how much your mortgage insurance premiums would be based on how much you borrow.
Current Annual MIP on Certain Streamline FHA Refinances
SF forward streamline refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount and takes effect on or after June 11th, 2012.
Current Annual MIP Premium other than Certain Streamline FHA Refinances *Revision to the Annual MIP Premium – as per Mortgagee Letter 2023-05
This Mortgagee Letter reduces the Annual Mortgage Insurance Premiums as well as amending the base loan amount threshold of $726,200 for all case numbers assigned on or after March 20th, 2023 for the following:
MORTGAGE TERMS OF MORE THAN 15 YEARS
- On loan amounts less than or equal to $726,200 with a Loan to Value of less than or equal to 90% and with a term more than 15 years. The annual MIP for these loans will be reduced to 50 basis points.
- On loan amounts less than or equal to $726,200 with a Loan to Value of greater than 90%, but less than or equal to 95% and with a term more than 15 years. The annual MIP for these loans will be reduced to 50 basis points.
- On loan amounts less than or equal to $726,200 with a Loan to Value of greater than 95%, and with a term more than 15 years. The annual MIP for these loans will be reduced to 55 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of less than or equal to 90% and with a term more than 15 years. The annual MIP for these loans will be reduced to 70 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of greater than 90%, but less than or equal to 95% and with a term more than 15 years. The annual MIP for these loans will be reduced to 70 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of greater than 95%, and with a term more than 15 years. The annual MIP for these loans will be reduced to 75 basis points.
MORTGAGE TERMS OF LESS THAN OR EQUAL TO 15 YEARS
- On loan amounts less than or equal to $726,200 with a Loan to Value of less than or equal to 90% and with a term less than or equal to 15 years. The annual MIP for these loans will be reduced to 15 basis points.
- On loan amounts less than or equal to $726,200 with a Loan to Value greater than 90% and with a term less than or equal to 15 years. The annual MIP for these loans will be reduced to 40 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of less than or equal to 78% and with a term less than or equal to 15 years. The annual MIP for these loans will be reduced to 15 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of greater than 78% , but less than or equal to 90% and with a term less than or equal to 15 years. The annual MIP for these loans will be reduced to 40 basis points.
- On loan amounts greater than $726,200 with a Loan to Value of greater than 90%, and with a term less than or equal to 15 years. The annual MIP for these loans will be reduced to 65 basis points.
FHA Loan Articles
September 13, 2023FHA rehab loans are a specialized type of mortgage loan offered by the Federal Housing Administration that allows borrowers to finance both the purchase or refinance of a home and the cost of needed repairs.
September 8, 2023Borrowers considering an FHA loan should be familiar with some basic loan terminology. These loans are popular among first-time homebuyers and those with lower credit scores because they often offer more flexible eligibility requirements and lower down payment options.
September 2, 2023You may have heard the terms co-borrower and cosigner in connection with your FHA loan process, but aren't sure about the distinction. Both a co-borrower and a cosigner can help a primary borrower qualify for a mortgage, but they have different roles and responsibilities.
August 27, 2023The Federal Housing Administration has specific credit requirements and guidelines for borrowers looking to buy or refinance homes with an FHA loan. In addition to what FHA guidelines state, lenders may have more stringent requirements that may vary from one lender to another.
August 23, 2023Mortgage APR (Annual Percentage Rate) and a loan's interest rate are two different things, although they are closely related. Understanding the difference is an important part of a borrower's analysis of the true cost of their mortgage.
August 19, 2023FHA refinance loans allow homeowners with existing FHA loans to refinance their mortgages. These loans are designed to help borrowers take advantage of lower interest rates, reduce their monthly mortgage payments, or access equity in their homes for various purposes.
