MIP (Mortgage Insurance Premium) consists of annual payments on HUD mortgages. MIP is first paid at closing, and typically costs 1% of the loan amount, though this varies. MIP for HUD multifamily loan programs must then be paid annually. Specific costs also vary by program.
MIP (Mortgage Insurance Premium) Definition
MIP (Mortgage Insurance Premium) consists of annual payments on HUD mortgages. MIP is first paid at closing. For applications submitted or amended on or after October 1, 2025, the MIP is a flat 0.25% of the loan amount due at closing and 0.25% annually thereafter for all multifamily property types; the prior program-by-program tiered categories were eliminated in the same notice (90 FR 45789). MIP for HUD multifamily loan programs must then be paid annually.
For example, for applications submitted or amended on or after October 1, 2025, MIP requirements for the HUD 223(a)(7) loan are a flat 0.25% upfront and 0.25% annually for all property types (90 FR 45789). The prior tiered schedule (0.50% market rate, 0.35% affordable, 0.25% Green MIP) no longer applies.
HUD 221(d)(4) MIP requirements follow the same flat schedule: for applications submitted or amended on or after October 1, 2025, 0.25% upfront and 0.25% annually for all property types (90 FR 45789). The prior tiered schedule (0.65% market rate, 0.45% affordable, 0.70% Section 220, 0.25% Green MIP) no longer applies.
To learn more about the HUD 223a7 refinance program, get a financing quote to speak to a HUD/FHA loan expert.
Related Questions
What is 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. For HUD 223(f) loans, for applications submitted or amended on or after October 1, 2025, MIP is a flat 25 basis points upfront and 25 basis points annually for all property types, including market rate properties; the prior tiered categories (including the Green MIP Reduction, Section 8/new money LIHTC, and Section 220 schedules) were eliminated (90 FR 45789). For HUD 232 healthcare loans, HUD's published schedule is 1% of the loan amount due at closing and 0.65% annually (escrowed monthly); the 2025 notice did not address Section 232, so confirm the current 232 MIP with the desk before sizing a deal.
How does MIP (Mortgage Insurance Premium) work?
MIP (Mortgage Insurance Premium) is an annual payment on a HUD mortgage, paid at closing, for each year of construction, and annually. The amount of MIP varies depending on the type of loan program and the property type. 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% In contrast, MIP requirements for the HUD 221(d)(4) loan 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% What are the benefits of MIP (Mortgage Insurance Premium)?
MIP (Mortgage Insurance Premium) is an important consideration when looking at HUD loans. It is a type of insurance that protects the lender from losses that occur when a borrower defaults. While upfront and annual MIPs are costs you must look at when exploring your loan options, there are ways to reduce them, and even without a reduction, HUD loans are still generally much less costly than other types of multifamily debt, even Fannie Mae and Freddie Mac loans.
The benefits of MIP include:
- Protection for the lender from losses that occur when a borrower defaults
- Reduced costs for HUD loans compared to other types of multifamily debt
- The ability to reduce MIPs through the Green MIP Reduction program
What are the drawbacks of MIP (Mortgage Insurance Premium)?
The main drawback of MIP (Mortgage Insurance Premium) is that it increases the cost of the loan. The MIP is an additional cost that is paid at closing and annually, which can add up over time. Additionally, the MIP rate is higher for market rate properties than for Section 8 or LIHTC properties, which can make it more expensive for borrowers.
Source: www.hud223f.loans/glossary/mip-mortgage-insurance-premium and www.hud232.loan/hud-232-glossary/mip-mortgage-insurance-premium
How much does MIP (Mortgage Insurance Premium) cost?
MIP (Mortgage Insurance Premium) costs vary depending on the loan program. For the HUD 223(a)(7) loan program, MIP costs are 0.50% upfront and 0.50% annually for market rate properties, 0.35% upfront and 0.35% annually for affordable properties, and 0.25% upfront and 0.25% annually for green MIP properties. For the HUD 221(d)(4) loan program, MIP costs are 0.65% upfront and 0.65% annually for market rate properties, 0.45% upfront and 0.45% annually for affordable properties, 0.70% upfront and 0.70% annually for Section 220 properties, and 0.25% upfront and 0.25% annually for green MIP properties. For the HUD 223(f) loan program, MIP costs are 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.
Sources: What is MIP (Mortgage Insurance Premium)? and MIP (Mortgage Insurance Premium) and the HUD 223(f) Loan Program
What are the eligibility requirements for MIP (Mortgage Insurance Premium)?
MIP (Mortgage Insurance Premium) eligibility requirements vary by program. For the HUD 223(a)(7) loan, the requirements 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
For the HUD 221(d)(4) loan, the 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 more information, please visit What is MIP (Mortgage Insurance Premium)? and Terms, Qualifications, and Guidelines.