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When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP).

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July 24, 2017
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News and Updates for Homeowners

Up Front Mortgage Insurance Premium (UFMIP) Changes for FHA Loans

Up Front Mortgage Insurance Premium (UFMIP) Changes for FHA Loans
May 15, 2017 - When buyers are approved for FHA home loans, they are required to carry mortgage insurance. That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The Up Front Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.

All affected FHA loans with case numbers assigned after January 26, 2015 will incur an Up Front Mortgage Insurance premium of 1.75 percent on the base loan amount.

This change means an increase in premiums for those looking for purchase money loans, plus existing FHA mortgage holders interested in refinancing. The increase affects FHA-to-FHA and "non-credit qualifying" refinancing.

*Revision to the Annual MIP Premium – as per Mortgagee Letter 2015-01

There will be no change in Annual Mortgage Insurance Premiums for all case numbers assigned on or after January 26th, 2015 for the following:

On loans with a Loan to Value of less than or equal to 78% and with terms up to 15 years. The annual MIP for these loans is 45 basis points.

On terms ≤ 15 years and loan amounts ≤ $625,500 - If the loan to value is ≤ 90%, the Annual Premium is 45 basis points (bps). If the loan to value is >90%, the Annual Premium is 70 basis points (bps).

On terms ≤ 15 years and loan amounts >$625,500 - If the loan to value is 78.01% - 90.00%, the Annual Premium is 70 basis points (bps). If the loan to value is >90%, the Annual Premium is 95 basis points (bps).

There will be the following reduction in premiums in Annual Mortgage Insurance Premiums for all case numbers assigned on or after January 26th, 2015 for the following:

On terms > 15 years and loan amounts ≤ $625,500 - If the loan to value is ≤ 95%, the new Annual Premium is 80 basis points (bps). If the loan to value is >95%, the new Annual Premium is 85 basis points (bps).

On terms > 15 years and loan amounts >$625,500 - If the loan to value is ≤ 95%, the new Annual Premium is 100 basis points (bps). If the loan to value is >95%, the new Annual Premium is 105 basis points (bps).

The latest policy information from the FHA says for traditional and refinance loans, the annual premium is to be paid monthly and is charged according to the length of the FHA loan, and loan-to-value ratio. Check with your loan officer for payment schedule information for your specific FHA home loan. 

TITLE I, HECM, AND HOPE FOR HOMEOWNERS

The increase in UFMIP does NOT affect Title I mortgages or Home Equity Conversion Mortgages, also known as HECM loans. Hope For Homeowners loans are also unaffected by the UFMIP increase.

OTHER LOANS

If you have a Section 247 (Hawaiian Homelands), a Section 248 (Indian Reservations) your loan is unaffected by the UFMIP change. Section 223(e) (declining neighborhoods) and Section 238(c) (Military Impact areas in New York ad Georgia) are also unaffected.

HOW DO UPFRONT MORTGAGE INSURANCE PEREMIUMS WORK?

The FHA charges an insurance premium up front, which is equal to a percentage of your mortgage. For purchase money FHA loans and full credit qualifying refinance FHA loans, the amount is 1.75 percent. FHA Streamline refinance loans are also charged a UFMIP of .55 percent.