When is Mortgage Insurance Premium (MIP) paid?

Mortgage Insurance Premium (MIP) is a fee associated with FHA loans designed to protect lenders in case of default. This premium is typically paid upfront at the time of loan closing, which is a key feature of FHA loans. When a borrower secures an FHA loan, they are required to pay an upfront MIP, which is usually a percentage of the loan amount. This upfront payment can be rolled into the mortgage amount to reduce out-of-pocket expenses at closing.

While some mortgage programs may require monthly payments for mortgage insurance, for FHA loans specifically, the upfront MIP is a distinctive requirement. Understanding the timing and nature of MIP is crucial for borrowers when budgeting for home purchasing costs and understanding their total loan expenses. Therefore, recognizing that MIP is associated with an upfront payment aligns with the guidelines around FHA lending.