Which loan program typically requires MIP?

Which loan program typically requires MIP?

• A. An FHA loan (correct)
• B. A conventional loan
• C. A VA loan
• D. A USDA loan

Answer: (A)

Mortgage Insurance Premium (MIP) is the insurance built into FHA loans to protect lenders against borrower default. It’s typically required for FHA financing and appears both as an upfront premium paid at closing and as an annual premium that’s collected monthly as part of the mortgage payment. Conventional loans may require PMI if the down payment is less than 20%, but that’s private mortgage insurance, not MIP. VA loans don’t use mortgage insurance; they have a funding fee instead. USDA loans rely on a guarantee fee rather than MIP, with an annual fee as part of the loan cost. Because MIP is the term used for FHA insurance, FHA loans are the typical program that requires MIP.

Mortgage Insurance Premium (MIP) is the insurance built into FHA loans to protect lenders against borrower default. It’s typically required for FHA financing and appears both as an upfront premium paid at closing and as an annual premium that’s collected monthly as part of the mortgage payment. Conventional loans may require PMI if the down payment is less than 20%, but that’s private mortgage insurance, not MIP. VA loans don’t use mortgage insurance; they have a funding fee instead. USDA loans rely on a guarantee fee rather than MIP, with an annual fee as part of the loan cost. Because MIP is the term used for FHA insurance, FHA loans are the typical program that requires MIP.