Frequently Asked Question: FHA / MIP / VA Funding Fee

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Services for Real Estate Pros with Scena Home Staging & Decora Photography

Frequently Asked Question: FHA / MIP / VA Funding Fee

Q: Q: I am going over our Closing Costs Worksheet (for our preapproval) and I see "FHA/MIP/VA Funding Fee". What is this? Is this something that has to be paid at closing or can it be added into the loan?

A: FHA has a one-time upfront mortgage insurance premium (UFMIP) of 1.75% of the mortgage amount. If you are doing an FHA loan, you can either pay the UFMIP out of pocket or roll it into the mortgage. If you are doing a 15 year mortgage with less than 10% down or a 30 year mortgage regardless of the amount down, there is also a monthly mortgage insurance premium.

VA has a one-time funding fee that varies in amount, and depends on the type of veteran, the type of transactions, and whether or not it's a first time use. If you are doing a VA loan, you can either pay the VA Funding Fee out of pocket or roll it into the mortgage. With VA loans, there's no monthly mortgage insurance premium.

USDA has a one-time funding fee of 2.0% of the mortgage amount. If you are doing an USDA loan, you can either pay the funding fee out of pocket or roll it into the mortgage provided that the house appraises for at least 2% more than the purchase price or its value. With USDA loans, there's no monthly mortgage insurance premium.

If you are not doing an FHA or VA or USDA, then there is no funding fee or upfront mortgage insurance premium.

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East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Topic:
Lending / Financial
Location:
Massachusetts Barnstable County Brewster
Groups:
Consumer Mortgage Tips
Tags:
va funding fee
fha mortgage loans
va mortgage loans
frequently asked questions about mortgages
fha upfront mortgage insurance premiums

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Rainmaker
1,079,273
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Lewis, thanks for the synopsis of MIP fees for government loans. I didn't know the exact amount for the FHA loans, nor the USDA loans. Thanks.

Nov 15, 2009 02:34 PM #1
Rainmaker
91,915
Julie Chroust
Julie Chroust, Bay Equity Home Loans, LLC - Walnut Creek, CA
NMLS# 249458, Senior Loan Officer

Good clear explanations!  Thank you!

Nov 15, 2009 02:37 PM #2
Rainmaker
394,903
Lew Corcoran, ASP®
Scena Home Staging & Decora Photography - East Bridgewater, MA
Home Stager & Real Estate Photographer

Sharon and Julie - thanks for your comments. It helps when you can compare the differences in loan products so you can make an informed decision.

Nov 15, 2009 11:42 PM #3
Rainmaker
152,370
Fred Sweezer Sr.
Hud Certified 203K Consultant - Long Beach, CA
Certified Home Inspector

Thanks for the loan process post very informative!

May 09, 2017 09:21 PM #4
Rainer
111,788
David A. Weaver
Peoples Bank & Trust Co. - Scottsdale, AZ
24 years helping folks finance their dreams.

Good description of the Up Front Mortgage Insurance Premium and the VA Funding Fee.  But, don't forget that FHA also has an annual premium of 0.85% of the loan amount times the current balance divided by 12 to equal the monthly mortgage insurance premium if the down payment is =< 5%, or 0.80% of the down payment is > 5%.  The monthly MI premium, stays on the loan for the life of the loan if the down payment is less than 10%, or 11 years if the down payment is more than 10%.  Also there are different premiums charged for non-conforming FHA's.  Best bet is to have your client contact a mortgage professional.

May 10, 2017 01:34 PM #5
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Rainmaker
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Lew Corcoran, ASP®

Home Stager & Real Estate Photographer
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