What is the initial mortgage insurance premium for a HECM?

The initial mortgage insurance premium (MIP) is an upfront fee you pay when you take out a reverse mortgage through the Federal Housing Administration (FHA). This fee is based on the value of your home and protects you by ensuring you’ll never owe more than your home is worth when the loan is repaid.

How much is the initial MIP?

The FHA charges 2% of your home’s value or the loan limit (whichever is lower) as the initial MIP. For example:

• If your home is worth $300,000, the initial MIP would be $6,000 (2% of $300,000).

Use the calculator above to find out how much your MIP would be.

Why is mortgage insurance required for a reverse mortgage?

Mortgage insurance makes sure you’re protected. It ensures that neither you nor your family will owe more than the home’s value when the loan is repaid.

Do I have to pay the initial MIP out of pocket?

No you don’t have to pay it out of pocket. The MIP is added to your loan balance when you close on the loan, meaning it will come out of the money you borrow.

Is there an annual mortgage insurance fee?

Yes, after the initial MIP, you’ll also pay an annual mortgage insurance fee. This is 0.5% of your loan balance and is added to your loan over time.

Does the loan limit affect my initial MIP?

Yes. The FHA has a loan limit of $1,209,750. If your home is worth more than this, the MIP will only be based on the limit, not your home’s full value.

Can I lower the initial MIP?

Unfortunately, the 2% fee is set by the FHA and cannot be reduced. However, our experts at South River Mortgage can help you explore other ways to make the overall loan costs manageable.

Are there loans that don’t charge initial MIP?

Yes—South River Mortgage’s HomeForLife program has no initial MIP, flexible financial requirements, and lower age requirements.

Find Out More About HomeForLife —

How does the initial MIP affect my loan?

The MIP is added to your loan balance, so it will reduce the amount of money you can take out from your reverse mortgage. However, you don’t pay it out of pocket.

How can South River Mortgage help?

We can help you understand all the costs of a reverse mortgage and see how it fits your financial goals. Use our calculator above to find out your upfront MIP cost and contact us to learn more.