HUD Mortgage Insurance Premium (MIP)

HUD Mortgage Insurance Premium (MIP) is the compensation the FHA receives to provide repayment insurance on government backed housing loans. There two portions to the MIP. The Annual MIP is paid annually (As the loan amortizes, the principal balance declines and in turn the MIP payment declines as well). The Upfront MIP is the fee collected by the FHA at loan closing to cover the time and effort spent by the FHA to get a loan from concept to closing. The term MIP, when used by Partner Energy’s HUD clients generally refer to 221(d)(4), 223(f) or 223(a)(7) deals. In certain circumstances, HUD will offer a lower than regular premiums for certain aspects of a deal. Those include affordable housing projects and projects that commit to environmental sustainability efforts that qualify them for the “Green MIP Reduction.”

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