FHA Upfront Mortgage Insurance Premium

The FHA upfront mortgage insurance premium, or UFMIP, is a one-time charge of 175 basis points, which is 1.75 percent, of the base loan amount on most FHA loans. It must be either entirely financed into the loan or paid entirely in cash at closing, and most buyers finance it (HUD 4000.1 II.A.2.e; ML 2023-05). It is separate from the annual mortgage insurance premium, and on most FHA loans you pay both.

How the numbers fit together

1. Base loan amount. The lender figures the maximum base loan from HUD's loan-to-value limit and your minimum required investment, which keeps the base loan within FHA's maximum loan-to-value of 96.5 percent of the adjusted value.
2. Upfront premium. 175 basis points of that base loan amount.
3. Total loan amount. If financed, the base loan plus the upfront premium, rounded down to the nearest whole dollar.

HUD does not count the financed upfront premium when it applies the area loan limits and loan-to-value limits. That is why your note amount can be above the base loan-to-value without breaking the rule. Your Loan Estimate shows the premium in the loan costs and the total in the loan amount (12 CFR 1026.37).

Exceptions

HUD's chart lists exceptions. Streamline and simple refinances of FHA loans endorsed on or before May 31, 2009 use a 1 basis point upfront premium. Hawaiian Home Lands loans use their own schedule. Indian Lands loans under Section 248 do not require an upfront premium.

Refunds

The upfront premium is not refundable, except in connection with refinancing to a new FHA-insured loan. In that case, a refund credit from the old premium may apply under HUD's refinance rules. The amount is a HUD calculation based on the timing. It shows on your case, not as a round number to memorize. See FHA streamline refinancing.

Upfront versus annual

The annual premium, called MIP, is charged monthly on top of the upfront premium. Its rate and how long it lasts depend on your term, loan-to-value and base loan amount. See FHA annual MIP. The upfront premium does not replace it.

Fictional example

Fictional example: a buyer in Fort Worth uses FHA with HUD's minimum required investment. The lender figures the base loan amount from the price and appraised value, then adds 175 basis points of that amount as the financed upfront premium. The note amount is higher than the base loan. The buyer's Closing Disclosure shows both numbers. Neither is an interest rate. The buyer also sees the annual MIP in the monthly payment.

Common mistakes

• Thinking the minimum required investment is the only FHA charge tied to a small down payment. The upfront premium is separate.
• Dividing the note amount by the price and thinking FHA broke its loan-to-value rule. The financed premium explains the difference.
• Thinking the upfront premium replaces the annual premium. On most loans, both are charged.
• Relying on older, retired FHA handbooks. FHA policy today is in Handbook 4000.1.

For the full program, see FHA loans in Texas.

Next step

If you want to see exactly how the upfront and annual premiums affect your FHA loan amount and payment, I can run your numbers. Book a call, or start an application.

Related questions

• How does FHA mortgage insurance work?
• FHA loans in Texas
• FHA streamline refinancing

Sources

Links checked Oct 21, 2026.

• HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, II.A.2 Allowable Mortgage Parameters and Appendix 1.0 Mortgage Insurance Premiums (Update 17, issued Nov 26, 2025, the version in effect today; Update 18, issued Aug 12, 2026, may be adopted now and must be used by Nov 10, 2026, and does not change the rules cited here): https://www.hud.gov/sites/default/files/OCHCO/documents/40001-hsgh-Update-17.pdf
• HUD Mortgagee Letter 2023-05, Reduction of FHA Annual MIP Rates (effective for case numbers endorsed on or after Mar 20, 2023): https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf
• CFPB Regulation Z, 12 CFR 1026.37 Content of the Loan Estimate (current text): https://www.consumerfinance.gov/rules-policy/regulations/1026/37/

About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.

Equal Housing Opportunity.

Last reviewed: Oct 2026

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