How do you calculate fha monthly mortgage insurance

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The formula for calculating the monthly mortgage insurance premium became effective May 1, 1998 (see attached Mortgagee Letter 98-22).

Below is the monthly mortgage insurance premium (mip) calculation with examples and pseudocode using the current initial and annual mip rates for mortgages assigned an fha case number prior to 4 October 2010. See FHA Single Family Home Policy Manual 4000.1 Exhibit 1.0 Mortgage Insurance Premiums [pdf] for current upfront and annual mip rates.

premium calculation

(round to the second decimal place based on the value of the third decimal place).

round to 530.80

result rounded to second decimal place based on value in third decimal place.

round to 519.12

result rounded to second decimal place based on value in third decimal place.

rounded to 43.26

This is the annual premium.

calculation of the annual average outstanding balance

To start, use the original loan amount as the previous balance. repeat the following steps for the remaining months of the year (11 iterations). the computation of the following years is the same. the second year will start with the last result of the first year.

1. multiply the previous balance by the annual interest rate of the contract. round the result to two (2) decimal places based on the value in the third decimal place.

2. Divide the result by 1200. Round the result to two (2) decimal places based on the value in 3rd decimal place.

3. add previous balance.

4. subtract p&i payment. note: for an arm, use original interest rate and original p&i for all years. for gem/gpm calculate the current p&i based on the amortization schedule. see the table below.

   when calculating the last year, add the 12 results from that year and divide the total by 12.

   the new monthly p&i for gem/gpm is not calculated if the twelfth month of the case has not been reached or if the payment number is greater than the maximum number of months.

   premium calculation example

   *based on the original amortization schedule.

   calculate the average annual outstanding balance:

   1. 106,605.00 * 7.5 = 799,537.5000 (rounded to 799,537.50)
   2. 799,537.50 / 1200 = 666.28125 (rounded to 666.28)
   3. 666.28 + 106,605.00 = 107,271.28
   4. 107,271.28 – 745.40 = 106,525.88
   1. 106,525.88 * 7.5 = 798,944.1000 (rounded to 798,944.10)
   2. 798,944.10 / 1200 = 665.78675 (rounded to 665.79)
   3. 665.79 + 106,525.88 = 107,191.67
   4. 107,191.67 – 745.40 = 106,446.27
   1. 106,446.27 * 7.5 = 798,347.025 (rounded to 798,347.03)
   2. 798,347.03 / 1200 = 665.2891916 (rounded to 665.29)
   3. 665.29 + 106,446.27 = 107,111.56
   4. 107,111.56 – 745.40 = 106,366.16
   1. 106,366.16 * 7.5 = 797,746.20 (rounded to 797,746.20)
   2. 797,746.20 / 1200 = 664.7885 (rounded to 664.79)
   3. 664.79 + 106,366.16 = 107,030.95
   4. 107,030.95 – 745.40 = 106,285.55
   1. 106,285.55 * 7.5 = 797,141.625 (rounded to 797,141.63)
   2. 797,141.63 / 1200 = 664.2847 (rounded to 664.28)
   3. 664.28 + 106,285.55 = 106,949.83
   4. 106,949.83 – 745.40 = 106,204.43
   1. 106,204.43 * 7.5 = 796,533.225 (rounded to 796,533.23)
   2. 796,533.23 / 1200 = 663.77769 (rounded to 663.78)
   3. 663.78 + 106,204.43 = 106,868.21
   4. 106,868.21 – 745.40 = 106,122.81
   1. 106,122.81 * 7.5 = 795,921.075 (rounded to 795,921.08)
   2. 795,921.08/ 1200 = 663.2675666 (rounded to 663.27)
   3. 663.267+ 106,122.81 = 106,786.08
   4. 106,786.08 – 745.40 = 106,040.68
   1. 106,040.68 * 7.5 = 795,305.10 (rounded to 795,305.10)
   2. 795,305.10 / 1200 = 662.75425 (rounded to 662.75)
   3. 662.75 + 106,040.68 = 106,703.43
   4. 106,703.43 – 745.40 = 105,958.03
   1. 105,958.03 * 7.5 = 794,685.225 (rounded to 794,685.23)
   2. 794,685.23 / 1200 = 662.2376916 (rounded to 662.24)
   3. 662.234+ 105,958.03 = 106,620.27
   4. 106,620.27 – 745.40 = 105,874.87
   1. 105,874.87 * 7.5 = 794,061.525 (rounded to 794,061.53)
   2. 794,061.53 / 1200 = 661.7179416 (rounded to 661.72)
   3. 661.72 + 105,874.87 = 106,536.59
   4. 106,536.59 – 745.40 = 105,791.19
   1. 105,791.19 * 7.5 = 793,433.925 (rounded to 793,433.93)
   2. 793,433.93 / 1200 = 661.19494 (rounded to 661.19)
   3. 661.19 + 105,791.19 = 106,452.38
   4. 106,452.38 – 745.40 = 105,706.98
   1. 105,706.98 * 7.5 = 792,802.3500
   2. 792,802.35 / 1200 = 660.668625
   3. 660.67 + 105,706.98 = 106,367.65
   4. 106,367.65 – 745.40 = 105,622.25
   1. 105,622.25 * 7.5 = 792,166.8750
   2. 792,166.88 / 1200 = 660.139066
   3. 660.14 + 105,622.25 = 106,282.39
   4. 106,282.39 – 745.40 = 105,536.99
   1. 105,536.99 * 7.5 = 791,527.4250
   2. 791,527.43 / 1200 = 659.60619
   3. 659.61 + 105,536.99 = 106,196.60
   4. 106,196.60 – 745.40 = 105,451.20
   1. 105,451.20 * 7.5 = 790,884.000
   2. 790,884.00 / 1200 = 659.07000
   3. 659.07 + 105,451.20 = 106,110.27
   4. 106,110.27 – 745.40 = 105,364.87
   1. 105,364.87 * 7.5 = 790,236.5250
   2. 790,236.53 / 1200 = 658.53041
   3. 658.53 + 105,364.87 = 106,023.40
   4. 106,023.40 – 745.40 = 105,278.00
   1. 105,278.00 * 7.5 = 789,585.0000
   2. 789,585.00 / 1200 = 657.987500
   3. 657.99 + 105,278.00 = 105,935.99
   4. 105,935.99 – 745.40 = 105,190.59
   1. 105,190.59 * 7.5 = 788,929.4250
   2. 788,929.43 / 1200 = 657.441191
   3. 657.44 + 105,190.59 = 105,848.03
   4. 105,848.03 – 745.40 = 105,102.63
   1. 105,102.63 * 7.5 = 788,269.72500
   2. 788,269.73 / 1200 = 656.891441
   3. 656.89 + 105,102.63 = 105,759.52
   4. 105,759.52 – 745.40 = 105,014.12
   1. 105,014.12 * 7.5 = 787,605.9000
   2. 787,605.00 / 1200 = 656.338250
   3. 656.34 + 105,014.12 = 105,670.46
   4. 105,670.46 – 745.40 = 104,925.06
   1. 104,925.06 * 7.5 = 786,937.95000
   2. 786,936.95 / 1200 = 655.781625
   3. 655.78 + 104,925.06 = 105,580.84
   4. 105,580.84 – 745.40 = 104,835.44
   1. 104,835.44 * 7.5 = 786,265.80000
   2. 786,265.80 / 1200 = 655.221500
   3. 655.22 + 104,835.44 = 105,490.66
   4. 105,490.66 – 745.40 = 104,745.26
   1. 104,745.26 * 7.5 = 785,589.45000
   2. 785,588.45 / 1200 = 654.657875
   3. 654.66 + 104,745.26 = 105,399.92
   4. 105,399.92 – 745.40 = 104,654.52

   this is the annual mip

   pseudocode

   input values

   interest = interest rate mip = annual mip rate months = years from amortization date * 12 orig_mtg = original mortgage amount p_i = monthly principal & initial interest = initial mip factor hold_val = a variable to store intermittent results total_amt = a variable to add the last 12 months begin last_val = orig_mtg total_amt = last_val for (i = 2 to months) hold_val = last_val * interest [round hold_val to 2 places after decimal] hold_val = hold_val / 1200 [round hold_val to 2 places after decimal] hold_val = hold_val + last_val hold_val = hold_val – p_i last_val = hold_val total_amt = total_amt + last_val if (remainder (i / 12) = 0) and ( i <> months) then total_amt = 0 end if next i total_amt = total_amt / 12 total_amt = total_amt * mip [round total_amt to 2 places after decimal] total_amt = total_amt / (1 + upfront) [round total_amt to 2 places after decimal] total_amt = total_amt / 12 [round total_amt to 2 places after decimal] print: monthly premium = total_amt end