What is an MIP (Mortgage Insurance Premium)?
An MIP , or Mortgage Insurance Premium, is an annual payment on a HUD mortgage, paid at closing, for each year of construction, and annually.
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An MIP, or Mortgage Insurance Premium, is an annual payment on a HUD mortgage, paid at closing, for each year of construction, and annually. MIP for HUD 223(f) loans is:
25 basis points for properties using a Green MIP Reduction
65 basis points for market rate properties
70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC
What is an MIP (Mortgage Insurance Premium)?
MIP (Mortgage Insurance Premium) is an annual payment on a HUD mortgage, paid at closing, for each year of construction, and annually. MIP for HUD 223(f) loans is:
- 25 basis points for properties using a Green MIP Reduction
- 65 basis points for market rate properties
- 45 basis points for Section 8 or new money LIHTC properties
- 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC
For HUD 232 loans, MIP is 1% of the loan amount (due at closing) and 0.65% annually (escrowed monthly). To learn more about FHA 232 loans, fill out the form below to speak to a HUD/FHA loan expert.
How does an MIP (Mortgage Insurance Premium) work?
MIP (Mortgage Insurance Premium) is an annual payment on a HUD mortgage, paid at closing and annually. The cost of MIP varies depending on the type of loan program. For example, MIP requirements for the HUD 223(a)(7) loan include:
Property Type Upfront MIP Annual MIP Market Rate 0.50% 0.50% Affordable 0.35% 0.35% Green MIP 0.25% 0.25% For HUD 221(d)(4) loans, MIP requirements include:
Property Type Upfront MIP Annual MIP Market Rate 0.65% 0.65% Affordable 0.45% 0.45% Section 220 0.70% 0.70% Green MIP 0.25% 0.25% For HUD 232 loans, MIP is 1% of the loan amount (due at closing) and 0.65% annually (escrowed monthly).
What are the benefits of an MIP (Mortgage Insurance Premium)?
MIPs provide lenders with protection against losses that occur when a borrower defaults on their loan. This protection allows lenders to offer more competitive loan terms, such as lower interest rates and longer loan terms. Additionally, HUD loans are generally much less costly than other types of multifamily debt, even Fannie Mae and Freddie Mac loans.
For HUD 223(f) loans, MIP is 25 basis points for properties using a Green MIP Reduction, 65 basis points for market rate properties, 45 basis points for Section 8 or new money LIHTC properties, and 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC.
For HUD 232 loans, MIP is 1% of the loan amount (due at closing) and 0.65% annually (escrowed monthly).
What are the drawbacks of an MIP (Mortgage Insurance Premium)?
The main drawback of an MIP (Mortgage Insurance Premium) is that it is an additional cost that must be paid upfront and annually. This cost can add up over time and can make it more difficult to qualify for a loan. Additionally, there are no ways to reduce the MIP, so it is important to factor this cost into your loan decision. However, HUD loans are still generally much less costly than other types of multifamily debt, even Fannie Mae and Freddie Mac loans.
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How much does an MIP (Mortgage Insurance Premium) cost?
MIP (Mortgage Insurance Premium) costs vary depending on the loan program. For example, MIP requirements for the HUD 223(a)(7) loan include:
- Market Rate Properties: 0.50% upfront, 0.50% annually
- Affordable Properties: 0.35% upfront, 0.35% annually
- Green MIP Properties: 0.25% upfront, 0.25% annually
In contrast, HUD 221(d)(4) MIP requirements include:
- Market Rate Properties: 0.65% upfront, 0.65% annually
- Affordable Properties: 0.45% upfront, 0.45% annually
- Section 220 Properties: 0.70% upfront, 0.70% annually
- Green MIP Properties: 0.25% upfront, 0.25% annually
For HUD 232 loans, MIP is 1% of the loan amount (due at closing) and 0.65% annually (escrowed monthly).