January 13, 2026
For most FHA single-family purchase and refinance loans, borrowers are required to pay an Upfront Mortgage Insurance Premium (UFMIP) at closing.
FHA mortgage insurance protects the lender—not the borrower—against loss if the loan defaults. FHA mortgage insurance consists of two separate components:
Upfront Mortgage Insurance Premium (UFMIP) – paid once at closing
Annual Mortgage Insurance Premium (MIP) – charged annually and paid monthly as part of the mortgage payment
According to U.S. Department of Housing and Urban Development (HUD), most FHA-insured loans require both an upfront and an annual mortgage insurance premium.
How Much Is the FHA UFMIP?
For the vast majority of FHA loans today, the UFMIP equals:
1.75% of the base loan amount
(also expressed as 175 basis points)
UFMIP Example
If your FHA base loan amount is $300,000:
UFMIP amount: $5,250
Total loan amount with financed UFMIP: $305,250
Important: FHA county loan limits apply only to the base loan amount, not the loan amount that includes financed UFMIP.
Can You Finance the FHA Upfront Mortgage Insurance Premium?
Yes. FHA borrowers generally have two options for paying UFMIP:
Finance the entire UFMIP into the loan (most common)
Pay the entire UFMIP in cash at closing
Important FHA Rule
The UFMIP must be paid either entirely in cash or entirely financed. Partial financing is not permitted.
Does Financed UFMIP Count Toward FHA Loan Limits?
No.
FHA loan limits apply only to the base loan amount.
Financed UFMIP is excluded from FHA loan limit calculations.
This allows borrowers to finance the upfront premium without exceeding county FHA lending limits.
What Are Basis Points?
A basis point (bp) equals 0.01%.
100 basis points = 1.00%
175 basis points = 1.75%
HUD uses basis points to standardize mortgage insurance calculations across loan programs.
Is FHA UFMIP Refundable?
In limited cases, yes—but only when refinancing into another FHA loan.
UFMIP refunds are not paid in cash and do not apply when refinancing into conventional, VA, or USDA loans.
FHA UFMIP Refund Rules
A UFMIP refund may apply when:
You refinance from FHA to FHA
The refinance occurs within 36 months of the original FHA loan closing
How the Refund Works
The refund amount declines monthly
The refund is applied as a credit toward the new UFMIP
No cash refunds are issued
Your FHA lender can calculate the exact refund amount based on how long you have had your existing FHA loan.
What Is the FHA Annual Mortgage Insurance Premium (MIP)?
In addition to UFMIP, FHA borrowers pay an annual Mortgage Insurance Premium, commonly referred to as periodic MIP.
Annual MIP is:
Assessed annually
Collected monthly as part of the mortgage payment
How Is FHA Annual MIP Calculated?
There is no single MIP rate for all FHA loans. The annual MIP percentage depends on several factors, including:
Loan-to-value (LTV) ratio
Base loan amount
Loan term (15-year vs. 30-year)
Different combinations of these factors result in different MIP rates.
How Long Do You Pay FHA Mortgage Insurance?
This is one of the most commonly misunderstood FHA rules:
If your down payment is less than 10%, FHA MIP is required for the life of the loan
If your down payment is 10% or more, FHA MIP is required for 11 years
FHA mortgage insurance does not automatically cancel based on home equity.
The only way to remove FHA MIP early is to refinance into a non-FHA loan—such as a conventional mortgage—once you qualify.
Final Takeaway
FHA mortgage insurance includes two separate costs:
UFMIP – a one-time upfront premium, usually financed
Annual MIP – an ongoing monthly cost based on loan characteristics
While FHA mortgage insurance increases the total cost of borrowing, it enables borrowers to qualify with:
Lower down payments
More flexible credit standards
Higher allowable debt-to-income ratios than many conventional loans
To determine your exact FHA mortgage insurance costs, speak with an FHA-approved lender who can calculate both the upfront and monthly premiums for your specific loan scenario.
Do you have questions about FHA home loans? You can apply or get pre-approved for an FHA loan at FHA.com.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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