Upfront Mortgage Insurance Premium (UFMIP)
UFMIP is the one-time upfront mortgage insurance premium on an FHA loan, equal to 1.75 percent of the base loan amount. Most borrowers finance it into the loan rather than pay it in cash at closing, so it is repaid over the term.
Every FHA-insured forward mortgage carries an upfront mortgage insurance premium, or UFMIP, of 1.75 percent of the base loan amount. It is separate from the annual MIP that is collected monthly. On a 386,000 dollar base loan, for example, the UFMIP is about 6,755 dollars.
Borrowers rarely pay the UFMIP in cash at closing. Instead it is usually financed, meaning it is added to the loan balance and paid off over the term, which raises the principal and interest slightly. The UFMIP rate has been 1.75 percent since 2013 under HUD Mortgagee Letter 2013-04. It is a HUD-set figure and separate from the annual MIP, whose rate depends on the loan term, size, and loan-to-value.
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Related terms: Mortgage Insurance (MIP) , Private Mortgage Insurance (PMI) , Loan-to-Value (LTV)
Source: HUD Mortgagee Letter 2013-04 and Single Family Housing Policy Handbook 4000.1
Last updated . Part of the FinExplained finance glossary .