Removal of MIP for FHA Loans
FAQ : How do I determine when the Annual MIP will be canceled?
Solution Details : For loans closed on or after January 1, 2001, FHA’s annual MIP is automatically terminated as follows.
For mortgage terms:
? greater than 15 years, MIP will be terminated when the Loan to Value (LTV) reaches 78%, provided the borrower has paid the MIP for at least five years.
? 15 years or less with LTV of 90.01% or greater, MIP will be terminated when the LTV reaches 78%, irrespective of the length of time the borrower has paid the MIP.
? 15 years or less with LTV of 90.00% or less will not be charged MIP.
? For loans closed and insured under the Hope for Homeowners Program, the annual MIP is collected monthly for the life of the loan
a) Although the MIP will be terminated,the FHA insurance will remain in force for the loan’s full term.
b) FHA will determine when a borrower has reached the 78% LTV ratio based on the lesser of the sales price or appraised value at loan origination.
c) FHA’s regulations do not permit a borrower to submit a new appraisal to reach the threshold for termination of MIP. Termination of MIP will normally be based on the scheduled amortization of the loan. If the 78% threshold is reached in advance of the scheduled amortization because of prepayments of loan principal the MIP may be terminated (but not sooner than five years from loan closing for loans with terms greater than 15 years, if the mortgage payments have not been more than 30 days delinquent during the previous 12 months.
d) The borrower must submit a termination request to the lender and the lender must provide the borrower’s request and supporting documentation with respect to the mortgage payments during the last 12 months to FHA for such termination.
Handbook 4155.2: 7. 3. c-d