UFMIP (Up‑Front Mortgage Insurance Premium) is the one‑time fee the Federal Housing Administration charges on FHA loans—usually 1.75% of the loan amount—paid at closing or rolled into the mortgage to insure the lender against borrower default.
The borrower on an FHA‑insured mortgage pays UFMIP at loan origination. It’s charged when the loan closes but the borrower can choose to pay it out of pocket at closing or have the lender add (finance) it to the loan balance.
Most FHA purchase and refinance loans require UFMIP, including standard 30‑ and 15‑year FHA loans and many streamline refinances. Exceptions or different rates exist for special FHA programs (for example, some reverse mortgage scenarios use a different upfront percentage). Always check your specific product—certain HUD/FHA programs or grant-funded loans may alter the requirement.
UFMIP is the one‑time, upfront component. It works alongside annual mortgage insurance (called MIP) that’s charged monthly. Combined, UFMIP + monthly MIP are the full FHA mortgage insurance cost stream that borrowers pay for the life (or portion) of the FHA loan.
The commonly used UFMIP rate for purchase and most refinances has been 1.75% of the base loan amount. Rates can change—verify the current percentage on HUD/FHA resources before closing.
Formula: UFMIP = Base loan amount × UFMIP rate.
Lenders may round UFMIP to the nearest cent or dollar and then either collect it at closing or add it to the principal. If financed, the new loan amount = base loan + UFMIP (and any financed closing costs), which raises the loan‑to‑value (LTV) and slightly increases monthly payments since interest accrues on the larger principal.
Paying UFMIP upfront increases your cash‑to‑close by the UFMIP amount but keeps your mortgage principal lower. This reduces the interest you pay over time and may slightly lower monthly payments versus financing the fee.
Financing UFMIP increases the principal balance immediately. Monthly payments rise because you’re paying interest on both the original loan and the financed UFMIP. Over the life of the loan this increases total interest paid.
MIP (Mortgage Insurance Premium) is an ongoing monthly fee on FHA loans (expressed as an annual percentage but collected monthly). UFMIP is a single upfront charge. Both insure lenders, but MIP continues (according to FHA rules) for a set period or the loan’s life depending on LTV and origination date.
Conventional loans use private mortgage insurance (PMI) which is typically only monthly (though some lenders offer upfront options). PMI can often be canceled once LTV reaches 80% (automatic or borrower‑requested), while FHA MIP rules are different—many FHA loans require MIP for longer or the life of the loan unless certain down payment/LTV thresholds and origination dates allow earlier cancellation. Compare total cost: FHA’s upfront plus monthly mix can be cheaper or more expensive than PMI depending on down payment, loan size, and how long you keep the loan.
The VA funding fee is a one‑time fee for VA loans that varies by service category and down payment; it replaces mortgage insurance for VA borrowers. Borrowers with VA eligibility do not pay FHA UFMIP—use the VA program instead. Other programs (USDA, some state programs) have their own fees or guarantees that may avoid UFMIP.
If you prepay or refinance your FHA loan into a non‑FHA loan, UFMIP is generally not refundable. However, if you refinance into another FHA loan within three years, you may be eligible for a partial UFMIP refund on the original loan—check FHA rules and timing for exact refund calculations.
In FHA streamline and many FHA rate‑and‑term refinances, the new FHA loan will typically charge a new UFMIP (unless exempt), and the old loan’s UFMIP refund rules may apply if the refinance occurs within the refund window. Some streamline refinances allow financing the new UFMIP into the loan to avoid out‑of‑pocket payment.
Choose a loan program that does not charge UFMIP: VA loans (no UFMIP), many conventional loans (PMI instead of upfront fee), and USDA loans (guarantee fee structure) may offer alternatives. Each program has eligibility requirements.
Putting more money down reduces loan amount and UFMIP dollar amount. Some lenders, employers, or state/local grant programs provide closing assistance or lender credits that can offset UFMIP paid at closing.
Many state and local housing agencies offer down payment assistance or programs that may cover or reimburse UFMIP. Check local housing authority programs and nonprofit homebuyer assistance resources when planning financing.
Buyer: first‑time purchaser using an FHA loan. Purchase price $300,000. Down payment 3.5% ($10,500). Base loan amount = $289,500.
If the buyer can afford the extra cash at closing, paying UFMIP upfront reduces long‑term cost. If cash is tight, financing UFMIP helps get into the home sooner but raises monthly payments and total interest. Run both scenarios with your loan officer to see the true lifetime cost difference.
Confirm current rules on HUD/FHA pages such as the FHA mortgage insurance premiums page: https://www.hud.gov/program_offices/housing/comp/premiums and the HUD site generally at https://www.hud.gov. These pages list current UFMIP percentages, MIP rules, and refund policies.
Most FHA loans require UFMIP, but rates and occasional exceptions depend on the program. Reverse mortgage UFMIP may use a different percentage. Check your loan product and HUD guidelines.
A partial UFMIP refund may be available if you refinance into another FHA loan within three years; full refunds are not typical on payoff/sale. Confirm refund rules with FHA and your servicer.
Monthly MIP duration depends on origination date, LTV, and loan term—some FHA loans require MIP for the life of the loan, others for a set number of years. UFMIP is one‑time and not “removed.” Review current FHA MIP rules for specifics.
Financing UFMIP increases the loan amount, which can slightly change your debt‑to‑income ratio and monthly payment—this may affect qualification. It does not change your interest rate itself but can affect approval if payments push your ratios too high.
Consult HUD/FHA official pages (for example, https://www.hud.gov/program_offices/housing/comp/premiums) and ask your lender for the exact rate being applied to your loan; always verify before closing.
