FHA Mortgage Insurance Premiums MIP post update 01-05-2024
FHA Mortgage Insurance Premiums (MIP) is mortgage insurance that guarantees the loan in case of default. This Home Mortgage Insurance insures lenders of possible losses.
This is for mortgage loans to finance a home purchase, proposed, under construction, or an existing one -to four-family dwelling or manufactured home. This also includes the refinancing of existing home loan mortgages.
Table of Contents
FHA Mortgage Insurance is different than Conventional Insurance guidelines as all FHA Loans carry MIP. Conventional loans do not need mortgage insurance if the loan to value is less than 80%.
As with all things mortgage; FHA loans are not an exception to constant changes. All loan applicants are encouraged to ensure they understand and know some of the rules before applying.
This advice is not to say that Mortgage Lenders will misrepresent something, but it is always important to have an idea of what the total cost is for a loan.
It is not wise to assume you will be taken care of when you apply for a loan. Again, it is for your benefit to know some basic and important rules for FHA, VA, and Conventional lending.
Upfront Mortgage Insurance Premium
FHA requires this upfront mortgage insurance premium, which is added to the loan amount. When the loan-to-value is calculated, the upfront MIP should not be included in the appropriate LTV ratio.
Upfront MIP Insurance Factor – This premium is added into the loan amount and is amortized in with your base loan amount. FHA holds this money in case of default.
175 basis points or 1.75% of base loan amount is the normal upfront MIP. This premium is for all loans to values and terms.
Sample – Principal & Interest Payment for a Loan Amount of $175,000
| Base Loan Amount = 175,000 + Upfront MIP of $3,062.00 = $178062 Total loan that is
amortized and will generate a principal and interest calculation to be: 178062 minus 3.5% downpayment =$168937.00 |
| 30-year loan @ 6.750 (trending rate re: Mortgage News Daily) = $1096.00 **Note
this is principal & interest only You will have monthly MIP plus Taxes and Insurance added to your loan payment Your monthly MIP would be: greater than 95% LTV = .55 basis points |
FHA asserts these calculations per the loan-to-value ratio and the loan term.
Annual/Monthly MIP Insurance Factors:
The second requirement for MIP is the annual or monthly premium added to your loan payment. The PITI
FHA Monthly MIP – 2024
Loan to Values Greater than 15 Years – 20, 25, and 30-year loans –
Base Loan Amount LTV MIP
| ≤$726,200
≤ $726,200 | ≤90.00%
< 90.00% but ≤95.00% | 50 bps (.50%)
50 bps (0.50%) |
| ≤ $726,200 | > 95.00% | 55 bps (0.55%) |
| >$726,200
>$726,200 | ≤90.00%
> 90.00% but ≤ 95% | 70 bps (.70%) |
| > $726,200 | > 95.00% | 75 bps (.755%) |
FHA Loan to Values 15 years or less 2024
Base Loan Amount LTV Annual MIP
| ≤ $726,200 | ≤ 90.00% | 40bps (0.40%) |
| ≤ $726,200 | > 90.00% | 15 bps (0.15%) |
| > $726,200 | ≤ 78.00% | 40 bps (0.40%) |
| > $726,200 | 78.01% to 90.00% | 40 bps (0.40%) |
| > $726,200 | > 90.00% | 65 bps (0.65%) |
This Table Gives the Term of the MIP Premium Based on Years & Term of Loan
| Loan Term | LTV Ratio | Annual MIP | Duration |
|---|---|---|---|
| ≤ 15 years | ≤ 90% | 0.15% | 11 years |
| ≤ 15 years | > 90% | 0.40% | Mortgage term |
| > 15 years | ≤ 90% | 0.50% | 11 years |
| > 15 years | > 90% but ≤ 95% | 0.50% | Mortgage term |
| > 15 years | > 95% | 0.55% | Mortgage term |
The table shows the annual MIP rates and durations for FHA loans based on the loan term and the loan-to-value (LTV) ratio. The table does not include the upfront MIP, which is 1.75% of the loan amount for all FHA loans1.
Basis Point Table
FHA will no longer cancel MIP at 78% LTV.
FHA will not cancel MIP @ 78% LTB for FHA loans originating on or after June 3, 2013. Special terms were made at that time.
Summary
FHA is a government agency that was put into place to help those applicants who needed special requirements not acceptable for conventional financing. There may be loan parameters that are not listed, however, we always try to keep up-to-date on changes.
Most FHA borrowers now want a lower down payment, more flexible seller contributions, and flexible sources of funds for the down payment and reserves.
FHA changes came about due to the economy and the conventional fallout for the past few years. This is why FHA has changed many rules and regulations as they have had default rates to consider, while still trying to serve consumers.
FHA has also changed the borrower’s down payment requirements to 3.5%. This must be paid by the borrower, from borrower funds, but those funds may be from a flexible source.
FHA does not originate the loan, the lender originates the loan, processes the loan, and underwrites the loan. However, FHA insures the mortgages and that is the need for the MIP premiums.
A conventional loan with a 20% down payment does not require mortgage insurance (MI). The conventional loan is an alternative if you have a down payment. *as stated above
Please note that all loan parameters a lender may require for making a loan are not mentioned here. Each lender may vary according to their policy and regulations, over and above FHA. The lender must protect themselves as well. One example is that a lender may not allow a borrower to have a credit score of less than 620-640.
This information has been verified and printed here for your convenience, and we will always help to prevent your lack of knowledge (if any) when seeking a mortgage loan.
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