FHA Loan Articles

How are FHA Refunds Determined?

Are you eligible for a refund from the government on your FHA home loan? If you took out your FHA loan after September 1st, 1983, paid an up front mortgage insurance premium and were on time with your FHA mortgage payments, the answer may be yes.

According to the Department of Housing and Urban Development, upfront mortgage insurance or MIP is a requirement for most FHA mortgage insurance plans. FHA loan rules require lenders to submit MIP payments on FHA home loans within a 10 day period after the closing date or disbursement date, whichever comes last.

When you’ve paid off your FHA home loan in full, you could be entitled to a refund of a portion of that up front FHA loan mortgage insurance premium, unless your loan was assumed or the FHA loan was refinanced in an FHA to FHA refinancing program. If you are eligible, there is some important information to keep in mind when anticipating that refund check.

FHA DECIDES THE AMOUNT

According to the Department of Housing and Urban Development, the FHA Commissioner determines what portion of you up-front premium will be refunded after your loan is terminated.

REFUNDS ARE TIME-BASED

How long was your loan insured? Your refund is calculated based on the total number of months.

SOME EXCLUSIONS MAY APPLY

Was your FHA home loan closed before January 1, 2001 and endorsed before December 8, 2004? If so, FHA rules say no refunds are owed after the end of the seventh year of insurance. For FHA-insured loans with closing dates on or after January 1, 2001 and endorsed before December 8, 2004, FHA borrowers aren’t owed refunds after the fifth year of insurance.

If you are eligible for an FHA loan up front mortgage insurance premium, you should get an application form (or sometimes the refund itself) within 45 days after your loan has been paid in full.

If you don’t receive the application or payment, call your loan officer to make sure a mortgage insurance termination request has been filed. If you need to contact the FHA about your refund, make sure you have your FHA case number. You may also need supporting documentation if you are divorced, recently married or have had your name legally changed.

If a co-borrower has died, you will need supporting evidence in the form of a death certificate and the birth certificates of any heirs where applicable.

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