MIP (Mortgage Insurance Premium)Last modified March 4, 2022
MIP is Mortgage Insurance Premium and is required on all FHA loans. The MIP is a payment for the government to guarantee the FHA loan to a lender in the event of a default on the part of the buyer. There is an up-front premium that can be financed and a monthly premium that is included in the total payment.
For FHA loans, the MIP is 1.75% of the loan amount. For USDA loans, the up-front mortgage insurance is 1%. This is not the same as the monthly mortgage insurance cost. The monthly mortgage insurance premium is .85% divided by 12 months of the loan amount. The USDA monthly mortgage insurance premium is .5% divided by 12 months of the loan amount.