The purpose of MIP (Mortgage Insurance Premium) is to provide additional security to the lender in case of default on the loan. MIP is an annual payment on a HUD mortgage, paid at closing, for each year of construction, and annually. For HUD 223(f) loans, MIP is 25 basis points for properties using a Green MIP Reduction, 65 basis points for market rate properties, 45 basis points for Section 8 or new money LIHTC properties, and 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC. For HUD 232 loans, MIP is 1% of the loan amount (due at closing) and 0.65% annually (escrowed monthly).

MIP (Mortgage Insurance Premium) costs vary depending on the loan program. For the HUD 223(a)(7) loan program, MIP costs are 0.50% upfront and 0.50% annually for market rate properties, 0.35% upfront and 0.35% annually for affordable properties, and 0.25% upfront and 0.25% annually for green MIP properties. For the HUD 221(d)(4) loan program, MIP costs are 0.65% upfront and 0.65% annually for market rate properties, 0.45% upfront and 0.45% annually for affordable properties, 0.70% upfront and 0.70% annually for Section 220 properties, and 0.25% upfront and 0.25% annually for green MIP properties. For the HUD 223(f) loan program, MIP costs are 25 basis points for properties using a Green MIP Reduction, 65 basis points for market rate properties, 45 basis points for Section 8 or new money LIHTC properties, and 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC.

MIP (Mortgage Insurance Premium) is an important consideration when looking at HUD loans. It is a type of insurance that protects the lender from losses that occur when a borrower defaults. While upfront and annual MIPs are costs you must look at when exploring your loan options, there are ways to reduce them — and even without a reduction, HUD loans are still generally much less costly than other types of multifamily debt, even Fannie Mae and Freddie Mac loans.

MIP (Mortgage Insurance Premium) coverage lasts for the life of the loan. For HUD multifamily financing, like the HUD 221(d)(4) program, MIP is set at a fixed rate and declines as the borrower pays off the principal balance of their loan. Source

MIP for HUD 223(f) loans is 25 basis points for properties using a Green MIP Reduction, 65 basis points for market rate properties, 45 basis points for Section 8 or new money LIHTC properties, and 70 basis points for Section 220 urban renewal projects that are not Section 8 or LIHTC. Source

MIP (Mortgage Insurance Premium) eligibility requirements vary by program. For HUD 223(a)(7) multifamily refinancing, the requirements include:

• 1.0% (up-front cost - due at closing)
• 0.25% annually of the loan total for 90%+ LIHTC properties and/or 90%+ Section 8 properties or Green certified properties
• 0.35% annually of the loan total for affordable properties (10%-90%)
• 0.50% annually of the loan for Market rate properties
• 0.55% annually of the loan total for healthcare properties

For more information, please visit hud223a7.loan/glossary/what-is-mip-mortgage-insurance-premium and hud223a7.loan/terms-qualifications-and-guidelines.