What Is Mortgage Insurance?

hands over house symbolizing mortgage insurance

Mortgage insurance is a policy that aims to protect lenders against any losses that may result from defaults made by homeowners on mortgages. The FHA requires mortgage insurance for an FHA loan, primarily for borrowers intending to make a down payment that is less than 20%.

Mortgage Insurance Premiums

Current Up-Front Mortgage Insurance Premium
The UPMIP is currently at 1.75% of the base loan amount. This amount applies, regardless of the term of amortization or LTV ratios.

Current Up-Front MIP on certain Streamline FHA Refinances

For FHA loans being refinanced by SF forward streamline refinance transactions endorsed on/before May 31, 2009, the UFMIP is at 0.01% of the base loan amount.

Current Annual MIP on certain Streamline FHA Refinances
For FHA loans being refinanced by SF forward streamline refinance transactions endorsed on/before May 31, 2009, the annual MIP will be 55 bps regardless of what the base loan amount is. This took effect on June 11, 2012.

Most Recent Changes to FHA Mortgage Annual Mortgage Insurance

*Revision to time period for assessing annual MIP
For loans which have FHA case numbers designated on or after June 3, 2013, FHA will collect annual MIP according to the chart below:

TermLTV %PreviousNew
<= 15 yrs<= 78No Annual MIP11 years
<= 15 yrs> 78 – 90.00Cancelled at 78% LTV11 years
<= 15 yrs> 90.00Cancelled at 78% LTVLoan Term
> 15 yrs>= 785 years11 years
> 15 yrs>= 78 – 90.00Cancelled at 78% LTV & 5 yrs11 years
> 15 yrs> 90.00Cancelled at 78% LTV & 5 yrsLoan Term

*Revision to Annual MIP Premium

An increase in Annual Mortgage Insurance Premiums will go into effect for every case number dated on or after June 3, 2013; this includes loans with a loan-to-value of less than or equal to 78% and with terms of up to 15 years. The newest annual MIP for these loans will go from a basis of 0 points to a basis of 45 points.

The following has already been in effect for all case numbers dated on or after April 1st, 2013.

On terms > 15 years and loan amounts <=$625,500 – If the loan to value is <= 95%, the new Annual Premium is 130 basis points (bps). If the loan to value is >95%, the new Annual Premium is 135 basis points (bps).

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

Note: SF forward mortgages with amortization terms of 15 years or less, and a loan to value ratio of 78% or less, remain exempt from the Annual MIP (Mortgagee Letter 2011-35).

Increase to FHA Annual Mortgage Insurance Premium for loans over $625,000
The FHA has also added an additional basis of 5 points to mortgages with base loan amounts over $625,000.

On terms > 15 years and loan amounts >$625,500 – If the loan to value is <= 95%, the new Annual Premium has a basis of 150 points (bps). If the loan to value is >95%, the new Annual Premium has a basis of 155 points (bps).

On terms <= 15 years and loan amounts >$625,500 – If the loan to value is 78.01% – 90.00%, the new Annual Premium has a basis of 70 points (bps). If the loan to value is >90%, the new Annual Premium has a basis of 95 points (bps).

Contact David Jacobson – OakStar Bank today for more information on FHA loans and other options for home financing.

Term > 15 Years

Base Loan AmountLTVEffectiveAnnual MIP
<= $625,500<=95.00%1-April-13130 bps
<= $625,500>95.00%1-April-13135 bps
Above $625,500<=95.00%1-April-13150 bps
Above $625,500>95.00%1-April-13155 bps

Term <= 15 Years With LTV Above 78%

Base Loan AmountLTVEffectiveAnnual MIP
Any Loan Amount<=78.00%3-June-1345 bps
<= $625,500<=90.00%1-April-1345 bps
<= $625,500>90.00%1-April-1370 bps
Above $625,500<=90.00%1-April-1370 bps
Above $625,500>90.00%1-April-1395 bps