UFMIP is associated with which loan program and how is it paid?

• A. FHA loans; paid monthly
• B. Conventional loans; paid at closing
• C. FHA loans; paid at closing or financed into the loan
• D. VA loans; paid at closing only

Answer: (C)

UFMIP, or Upfront Mortgage Insurance Premium, is tied to FHA loans. It is collected as a lump sum at closing, but you have the option to finance it into the loan amount, which increases the financed principal rather than requiring an upfront cash payment. This upfront charge is separate from the ongoing monthly mortgage insurance required by FHA, which is paid as part of monthly payments. Conventional loans don’t have UFMIP, and VA loans use a funding fee instead. So the correct idea is that FHA loans involve an upfront premium paid at closing or financed into the loan.