One-time FHA mortgage-insurance charge paid at closing or commonly financed into the mortgage balance.
Upfront mortgage insurance premium, or UFMIP, is the one-time FHA mortgage-insurance charge due at closing. A borrower can commonly pay it in cash or finance it into the mortgage, subject to the FHA loan structure.
Financing UFMIP can preserve cash at closing, but it increases the opening mortgage balance and the interest paid over time. Paying it in cash avoids adding that amount to principal but raises cash to close.
UFMIP also exists alongside annual MIP. Borrowers sometimes assume the upfront charge buys out the monthly insurance, but most FHA forward mortgages use both components.
UFMIP appears during FHA loan comparison and on the Loan Estimate as a program-specific upfront charge. When it is financed, the borrower should distinguish the base loan amount from the larger total mortgage amount after UFMIP is added.
The Closing Disclosure confirms the premium and whether it was paid at closing or financed. After closing, the financed amount is part of principal and accrues interest like the rest of the mortgage balance.
| Choice | Cash to close | Opening balance | Long-term effect |
|---|---|---|---|
| Pay UFMIP in cash | Higher | Base mortgage remains lower | No mortgage interest on the premium |
| Finance UFMIP | Lower than paying it fully in cash | Higher | Premium becomes principal and accrues interest |
Financing the premium does not count as making a larger down payment and does not remove annual MIP.
Assume a $300,000 FHA base loan and an illustrative UFMIP rate of 1.75%:
| Calculation | Amount |
|---|---|
| Base loan amount | $300,000 |
| UFMIP | $300,000 x 1.75% = $5,250 |
| Total mortgage if fully financed | $305,250 |
The borrower avoids paying the $5,250 fully from cash at closing but begins with $5,250 more principal. The rate shown is an illustrative application of a common FHA rate; current program rules and the official disclosures determine the actual charge.
UFMIP differs from Annual Mortgage Insurance Premium because UFMIP is charged once at closing, while annual MIP is assessed over time and normally paid monthly.
It differs from Single-Premium Mortgage Insurance because UFMIP belongs to FHA financing. Single-premium MI is a private-insurance plan used with a conventional mortgage.
It also differs from Closing Costs. UFMIP is shown around closing, but it is a specific FHA program charge and may be financed rather than paid entirely in cash.