Do You Need Mortgage Insurance for a HUD 232 Loan?
Yes, HUD 232 loans require borrowers to pay a Mortgage Insurance Premium (MIP), as both a one-time and an annual expense. MIP for these loans includes a 1% one time MIP assessment, payable at closing, and a 0.65% (65 basis points) annual MIP charge, paid each year for market rate properties.
What is MIP?
For conventional mortgages, borrowers pay mortgage insurance when their down payment is less than 20% of the property cost. However, HUD requires borrowers to pay MIP. It is both a one-time payment and an annual cost. In addition to the 0.65% MIP for market rate properties, HUD allows the following adjustments:
0.45% (45 basis points) for Section 8 or new money LIHTC properties
0.70% (70 basis points) for Section 220 urban renewal projects (non-Section 8 and non-LIHTC projects)