What Is HUD Multifamily MIP? The 0.25% Mortgage Insurance Premium, Explained

MIP is what HUD charges to insure the mortgage if it defaults. It is collected in two forms: an upfront amount capitalized into the loan at endorsement, and an annual amount charged on the outstanding principal balance for every year the loan remains active and insured. The upfront and annual rates are both 0.25%.

The 0.25% rate is the same on every FHA multifamily program — 223(f) refinance and acquisition, 221(d)(4) new construction and substantial rehabilitation, 223(a)(7) refinance, 241(a) supplemental loans, and the less common Sections 207, 213, 220, and 231. It applies to applications submitted or amended on or after October 1, 2025, so long as the loan has not been initially endorsed. Loans endorsed before that date keep the premium they closed with, which were generally higher.

On refinance and acquisition programs the initial MIP is 0.25% of the original mortgage amount, financed inside the mortgage rather than wired at closing. Construction and substantial rehabilitation deals calculate it differently, and we work through that in Section 4.

This article covers the apartment side of FHA. Residential care and healthcare facilities insured under Section 232 run on their own MIP schedule.

HUD's insurance protects the lender. If the loan defaults, the lender assigns the mortgage to HUD, collects insurance benefits, and HUD becomes the holder of the note. The mortgage does not disappear when the claim is paid. The borrower still owes it and can still lose the property through foreclosure — non-recourse limits what a sponsor can lose to the asset and the guarantees they signed, not whether the asset is at risk. What changes on a default is who the borrower is dealing with.

This means that there is a secondary beneficiary, which is the final security holder. HUD-insured multifamily loans are often pooled into Ginnie Mae project loan securities, and Ginnie Mae guarantees timely payment of principal and interest to the investor with the full faith and credit of the United States. That guarantee means the investor is pricing a federally backed instrument rather than real estate credit.

This is where HUD's low interest rates come from. Agency multifamily paper — Fannie Mae DUS certificates, Freddie Mac K classes — carries the guarantee of the Government Sponsored Entity (GSE). Even with Treasury support behind the conservatorship, an investor holding that security is taking the credit of a company. A Ginnie Mae loan security is a direct obligation of the United States. Investors price those two differently, which often results in a lower borrower note rate.

It should be noted that MIP is charged on top of the note’s interest rate rather than inside it, so a HUD quote and an agency quote only compare on an all-in basis — interest rate plus MIP against the agency interest rate. Under the old MIP rates a market-rate 223(f) carried 60 basis points of MIP, which consumed much of that tighter Ginnie Mae spread. At 25 basis points most of that advantage stays with the borrower, and HUD's all-in cost typically comes in below the agency execution on the same asset.

What the borrower is getting with the MIP is that Ginnie Mae pricing, plus terms that are only available when the credit risk sits with HUD: 35 years fully amortizing on a 223(f), 40 years plus the construction period on a 221(d)(4), fixed for the entire term, non-recourse, and assumable. There is no balloon, no maturity the sponsor has to plan a refinance around, and no rate reset. This is only widely available because HUD and Ginnie Mae are insuring the terms.

MIP is not a static annual bill from the first day the way principal and interest payments are. HUD calculates the premium on a dollar-days basis — unpaid balance times days outstanding, times the MIP rate, divided by 365 — while the amount collected at closing is a flat 0.25% of the original mortgage. Those are two different numbers, and the gap between them is settled after closing.

Take an example 150-unit market-rate refinance: a $33,570,000 223(f) mortgage at 5.50%, endorsing August 15, with the interest-only payment due September 1 and amortization beginning October 1.

The initial MIP collected at closing is 0.25% of the original mortgage amount, or $83,925.

HUD's charge through the first year runs in two pieces:

Each line is unpaid balance × days × 0.25% ÷ 365. Figures assume a 5.50% note rate on a 35-year amortization.

The difference between the $94,329.12 HUD charges and the $83,925 collected is $10,404.12. It is escrowed at closing and disbursed to HUD when amortization begins. The shortfall exists because the loan is insured from the day it is endorsed while the closing payment is sized as a percentage of the mortgage rather than as coverage for a period, so the 47 days between endorsement and amortization get charged on top.

From there the loan runs on an annual cycle keyed to the amortization date rather than to closing. Each year's premium is the estimated average unpaid balance for that year times 0.25% — $82,686.93 in year two, $81,804.39 in year three. The servicer escrows for it monthly, $6,890.58 a month in year two, and remits to HUD annually, so the borrower sees MIP as a line in the monthly payment rather than an annual invoice. HUD publishes an MIP amortization schedule shortly after closing showing the annual amounts.

MIP accrues on a 365-day year. The note's interest accrues on 360.

On 223(f) the initial (upfront) MIP is one year of MIP, because the loan funds at closing and starts amortizing. A 221(d)(4) is different because the loan is endorsed at initial closing and then drawn down over the construction period through monthly advances, and it does not begin amortizing until final endorsement.

HUD charges for that period up front. The initial MIP on new construction and substantial rehabilitation programs insuring advances is calculated on the annual MIP for the entire construction period, rounded up to the nearest whole year, and it is based on the face amount of the mortgage rather than on advances outstanding.

Two consequences result from rounding up to the nearest year. A 13-month construction schedule and a 24-month schedule have the same initial MIP, and a 12-month schedule costs half of both.

This is also where HUD’s 2025 MIP rate change impacted deals the most. On that same deal under the prior 65 basis point 221(d)(4) rate, the initial MIP would have been 0.65% x 2 x $40,000,000, or $520,000. At 0.25% it is $200,000. A difference of $320,000 in the development budget.

At final endorsement the loan converts to a permanent, amortizing mortgage and the annual MIP cycle begins.

The annual MIP is charged on the estimated average unpaid balance for the coming year, so it declines as the loan amortizes. At 0.25%, MIP costs $2,500 per year for every $1,000,000 of average balance. On the $33,570,000 refinance from Section 3, the annual MIP runs $82,686.93 in year two, and by the time the average balance has amortized to $25,000,000 it is $62,500, and at $10,000,000 it is $25,000. The MIP rate never changes; only the balance it is applied to does.

The MIP is charged for as long as the insurance is in force, and the insurance is in force for as long as the mortgage is. On a 223(f) that can be for 35 years. On a 221(d)(4) it can be for 40 years plus the construction period.

Does HUD MIP ever go away?

No, the MIP cannot go away. There is no loan-to-value threshold that cancels it, no equity test, no payment-count trigger, and no borrower election. A HUD-insured loan carries MIP from endorsement to payoff.

The rules people are usually thinking of belong to FHA's single-family program, which has its own cancellation provisions tied to loan-to-value and term. Nothing comparable exists on the multifamily side. A property worth twice what it was at closing pays the same 0.25% on the same balance as one that has not moved.

MIP ends when the mortgage ends. That means paying the loan off, prepaying it, or refinancing it — the last two subject to whatever prepayment provision the note carries. Refinancing within HUD does not eliminate the MIP: a 223(a)(7) or a new 223(f) is a new insured mortgage, and it begins its own MIP cycle at 0.25% on the new loan amount. A loan assumption does not stop it either. The loan is assumable, and MIP is an obligation of the mortgage rather than of the borrower, so it continues on the same terms in the buyer's hands.

Before this change, MIP was not one rate across all loan programs. HUD set MIP amounts across four categories and eleven loan programs, which produced many individual rates, and where a deal was on that grid drove a meaningful part of its cost. A market-rate 223(f) paid 100 basis points upfront and 60 annually. The same loan qualifying under the Green and Energy Efficient Housing category paid 25 and 25.

Basis points. Prior rates are superseded and are shown for comparison only. Programs are often typed without punctuation on a term sheet — 221d4, 223f, 223a7, 241a. Risk-share MIPs under 542(b) and 542(c) are 25 basis points multiplied by the percentage of risk FHA assumes.

The three reduced categories created in 2016 — Broadly Affordable, Affordable, and Green and Energy Efficient — were eliminated along with the qualification requirements that came with them.

HUD's stated reason for lowering the MIPs was rising housing costs. The notice traces the action to a January 20, 2025 presidential memorandum directing agencies to deliver price relief, including by lowering the cost of housing and expanding supply, and to Executive Order 14154, which shifted agency priorities away from policies promoting green and energy efficient goals. HUD wrote that market-rate MIP amounts had been left unchanged in 2016 and remained cost prohibitive against construction costs and interest rates that had risen sharply since 2021.

We saw this on the ground. From March 2024 to March 2025, 96% of 221(d)(4) and 223(f) closings used one of the reduced incentive categories — Broadly Affordable, Affordable, or Green. Only 4% were market-rate deals without a green or affordable qualification. HUD read that as the market needing the 0.25% rate to pencil, and set it at the statutory minimum for everyone rather than continue rationing the low rate through categories, most often the Green MIP rate.

Several commenters asked HUD to reduce the MIP rates retroactively on already closed loans. HUD declined, and its reasoning is worth understanding if you are holding an older loan: HUD relies on the MIP rates agreed to at initial closing to produce the revenue that offsets insurance claims, which we cover in Section 9. A loan initially endorsed at 60 basis points stays at 60 basis points for the rest of its term.

While HUD would not change the MIP rate on loans already endorsed, it did eliminate the compliance obligations that came with the old categories, and that relief reaches loans already closed.

For every loan closed under the Green and Energy Efficient Housing rate, HUD eliminated all green-related requirements. Evidence of initial green building achievement, annual reporting of energy performance, and the executed regulatory rider are no longer of force and effect. An owner still assembling an annual energy report on a loan closed under the green rate is producing a document nobody is entitled to receive.

Form HUD-92013-D, the Reduced MIP Certification used to establish eligibility for a reduced category, goes with them. There is no reduced category left to certify to.

For a sponsor underwriting new deals, the practical effect is that green certification and affordability qualification no longer carry a financing benefit through MIP. They may still carry benefits elsewhere — tax credits, state and local programs, utility incentives, exit pricing — but the MIP is 0.25% either way, and a deal no longer needs to be engineered toward a category to reach the low rate.

MIP is not just a fee that sits in the Sources and Uses statement. It also affects the loan sizing math, because HUD's debt service coverage test measures NOI against total debt service, and the annual MIP is part of that debt service.

The MIP is added onto the loan constant undiluted. For sizing, the annual MIP is applied to the full loan amount: loan amount times the annual rate divided by twelve for month one, which annualizes to exactly the loan amount times the rate. The rate adds straight into the constant alongside interest and the amortization component. The MIP actually billed runs on the average balance, as Section 3 describes, but the sizing test uses the full loan amount. We work through why in How a DSCR-Constrained Mortgage Works, which also corrects a commonly used sizing shortcut that mistakenly overstates the loan amount.

On a market-rate 223(f) with $2,000,000 of underwritten NOI at 5.50% on a 35-year schedule, income available for debt service is $1,740,000, reflecting HUD's 87% of net operating income standard for market-rate deals, roughly a 1.15x coverage. The amortization component at that rate and term is 0.944%.

The MIP change alone is worth $1,291,480, or 5.2% more mortgage on identical property performance.

A 221(d)(4) runs the same calculation on a 40-year schedule, where the amortization component is 0.689%. Same NOI, same rate, and a MIP moving from 65 to 25 basis points:

That is $1,580,398, or 6.2%. The gain is larger than on the 223(f) for two reasons: the reduction is 40 basis points rather than 35, and the longer amortization produces a lower constant, so each basis point is a larger share of the whole.

Both construction and refinance deals have a second interaction on the cost side, and they work differently. On construction, the initial MIP is a mortgageable cost, meaning it is part of the replacement cost basis the loan-to-cost criterion is applied against. Cutting the MIP rate cuts total cost, which cuts the LTC criterion loan amount. On the $40,000,000 two-year construction deal from Section 4, the initial MIP fell from $520,000 to $200,000. Total development cost falls by the full $320,000 while the cost-criterion loan falls by 87% of it, or $278,400, so the sponsor's equity requirement falls by the $41,600 difference.

On a refinance the initial MIP affects the loan criteria only under one condition. Initial MIP is part of the cost of refinance, alongside the existing debt payoff, any prepayment penalty, required repairs, the replacement reserve deposit, third-party report costs, and lender, HUD, and legal fees. That refinance cost figure is not the criterion by itself. The criterion sizes to the greater of 80% of value or the total cost of the transaction, capped by the 87% ceiling, so cost only controls when it exceeds 80% of value — the transaction-cost-covering refinance. When the property carries enough equity that 80% of value clears what it costs to close, the deal produces cash-out, 80% LTV becomes the operative number, and the initial MIP does not touch this criterion at all.

Where cost does control, the initial MIP change flows through dollar for dollar rather than at a leverage percentage. On the $33,570,000 refinance, the initial MIP would have been $335,700 at the prior 1.00% rate against $83,925 at 0.25%. The cost of refinance is $251,775 lower and the criterion result comes down by the same $251,775 — the loan and the thing the loan has to cover moved together. The full treatment of that criterion, including how it governs cash-out, is in How HUD Sizes a 223(f) Multifamily Mortgage.

Which effect a sponsor actually sees comes back to which criterion binds. A DSCR-constrained deal takes the proceeds increase and nothing else. A cost-constrained construction deal takes a smaller loan against a smaller cost and a slightly lower equity requirement. A cash-out refinance sized at 80% of value keeps the same loan amount either way, but the initial MIP is a use of those proceeds, so a smaller MIP amount leaves more cash to the sponsor at closing on top of the lower cost over the term.

As noted earlier, several commenters on the proposed notice asked HUD to eliminate MIP outright, or to lower it to something like 0.05%. HUD's answer was that it cannot. The MIP range is set by statute — Section 203(c)(1) of the National Housing Act, at 12 U.S.C. 1709(c)(1), authorizes the Secretary to set the charge between 0.25% and 1.00% per annum of the outstanding principal balance. HUD moved to the bottom of that range and has no authority to go below it. A rate lower than 0.25% requires Congress, not HUD.

Changing the rate at all required a long process. Under 24 CFR 207.254, HUD had to publish notice of a MIP change in the Federal Register and take comment for 30 days. HUD published the proposed notice on June 26, 2025, the comment period closed July 28, fourteen comments came in, and the final notice published September 23. A future administration that wanted to reverse this would face the same requirement, and much more industry pushback.

Where the MIP payments go

Each year HUD scores the loans it expects to insure that year against what they will cost in insurance claims. The calculation runs the full 35 or 40 years: the MIP payments and recoveries HUD expects to collect on that year's loans, less the claims it expects to pay on them, discounted to present value. A book that collects more than it costs produces revenue to the Treasury. A book that costs more requires an appropriation before HUD can insure anything new.

HUD scores the 2027 apartment book at -1.86%, or about $1.86 of expected net collection per $100 insured, with the receipts above reflecting the portion recognized as those loans disburse. Adding healthcare and hospitals brings the fund's 2027 book to $21.5 billion and $512 million.

Two limits on the figure. It covers a single year's lending — the loans already on the books are re-examined annually on a separate line and are not in it. And it is a valuation rather than a collection. Administrative expenses are appropriated separately.

Every book since FY2013 has scored in this way. HUD announced the change in an April 2012 Federal Register notice stating that no active multifamily or healthcare insurance program would require appropriated subsidy going forward.

This is the math behind HUD's own explanation of the MIP rate cut. HUD ran an impact analysis on the insurance fund before proposing the change and reported acceptable results, citing its underwriting and very low claim rates — the FY2027 justification puts claims under two percent in both the multifamily and healthcare portfolios. It is also why HUD refused to reduce rates retroactively: HUD relies on the MIPs agreed to at initial closing to produce the revenue that offsets claims, and the existing book is what those projections were built on.

What is HUD MIP?

MIP is the mortgage insurance premium HUD charges to insure a multifamily mortgage. It is collected as an upfront payment capitalized into the loan at endorsement and an annual payment charged on the outstanding principal balance every year the loan is insured. The insurance protects the lender and the security holder; the borrower pays for it and remains liable on the debt.

What is the current HUD MIP rate?

0.25% upfront and 0.25% annually, on every FHA multifamily program. HUD set the uniform rate in a Federal Register notice published September 23, 2025, applicable to applications submitted or amended on or after October 1, 2025, so long as the loan has not been initially endorsed. It replaced a tiered structure with MIP rates ranging from 25 to 100 basis points.

Does HUD MIP ever go away?

No. There is no loan-to-value threshold, equity test, or payment-count trigger that cancels it. A HUD-insured loan carries MIP from endorsement to payoff — 35 years on a 223(f), 40 years plus construction on a 221(d)(4). The MIP ends only when the mortgage ends, through payoff, prepayment, or refinance, and refinancing within HUD starts a new MIP cycle on the new loan.

Is HUD multifamily MIP the same as the MIP on an FHA single-family loan?

No. They are separate programs with separate rules. The cancellation provisions people are usually thinking of — the ones tied to loan-to-value and loan term — belong to FHA's single-family program. Nothing comparable applies to multifamily.

How much is MIP on a HUD 223(f) loan?

0.25% both upfront and annually. On a $33,570,000 refinance, the initial MIP collected at closing is $83,925, financed into the mortgage rather than paid in cash. Each annual premium after that is 0.25% of the estimated average unpaid balance for the coming year, so the dollar amount declines as the loan amortizes.

How much is MIP on a HUD 221(d)(4) loan?

The rate is 0.25%, but the initial MIP is calculated differently. On construction and substantial rehabilitation deals it covers the entire construction period, rounded up to the nearest whole year, and is charged on the face amount of the mortgage. A $40,000,000 loan with a 20-month schedule rounds to two years: 0.25% x 2 x $40,000,000, or $200,000. The annual payment begins after final endorsement.

Was the Green MIP eliminated?

Yes. HUD eliminated the Green and Energy Efficient Housing, Affordable, and Broadly Affordable categories effective September 23, 2025. For loans already closed under the green rate, HUD also eliminated the green requirements — the regulatory rider, annual energy performance reporting, and evidence of initial green building achievement are no longer of force and effect. Those loans keep the rate they closed with.

Does the lower MIP increase my loan amount?

On a DSCR-constrained deal, yes. The annual MIP is part of the loan constant HUD sizes against, so 35 basis points of MIP reduction moves proceeds the same way 35 basis points of rate would. On a market-rate 223(f) at 5.50% with $2,000,000 of NOI, the move from 0.60% to 0.25% is worth about 5.2% more mortgage. On a deal constrained by value or cost, it lowers cost without increasing proceeds.