Can I Include UFMIP in My FHA Loan?
"Can I roll my upfront MIP into my loan? Can I include the up front MIP into the loan even if it takes the loan amount above the county loan limits? Or must I pay cash up front instead?"
Up front mortgage insurance payments, called UFMIP for short, are governed by FHA loan rules as listed in HUD 4155.2, which states:
"The UFMIP remittance period begins on the date of loan settlement or the date of disbursement of the mortgage proceeds, whichever is later. UFMIP must be paid to FHA in a lump sum within 10 calendar days after the loan is closed."
FHA loan rules permit that lump sum to be paid by the borrower in cash or included in the loan amount. However, the rules don't let you pay some in cash and finance the balance of the UFMIP. According to HUD 4155.2:
"The UFMIP must be either
entirely financed into the mortgage, with the mortgage amount rounded down to a whole dollar (with the exception of instances in which the borrower chooses to pay up to 49.99 of the UFMIP in cash, in which case it would not then be reflected in the total mortgage amount), or
paid entirely in cash and all mortgage amounts must be rounded down to a multiple of $1.00."
When it comes to including UFMIP in the loan amount, borrowers don't need to worry about exceeding the county loan limits because of the added UFMIP amount. According to HUD 4155.2, Chapter 7 Section 2.B, UFMIP Payment Policy,
"The UFMIP amount, that is the total mortgage amount, is not considered when determining compliance with statutory loan limits or LTV limits. The base mortgage amount must comply with the requirements. The total mortgage amount may exceed this limit by the financed UFMIP amount." (Emphasis ours.)
To further clarify, special attention should be given to the language in that quote of the FHA loan rules covering this issue-note the FHA makes a distinction between the "base" loan amount and the "total" loan amount, which would be the sum of both the loan and the UFMIP included in that loan.
The base loan amount would be governed by the county loan limits. The total loan amount would include UFMIP should the borrower choose to finance it instead of paying it up front in cash.
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