General Mortgage Knowledge · 20% of the SAFE exameasy
Correct answer: $254,375 — UFMIP is 1.75% of the loan amount
The FHA upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount. Calculation: $250,000 × 1.75% = $4,375. When financed into the loan, the total becomes $250,000 + $4,375 = $254,375. The UFMIP can be paid in cash at closing or financed into the loan (most borrowers finance it). This is separate from the annual MIP, which is paid monthly as part of the mortgage payment. The 0.85% figure is a common distractor — it represents a typical annual MIP rate, not the upfront premium. The 1.00% and 2.25% rates do not correspond to any current FHA MIP schedule. On the exam, remember: UFMIP = 1.75% upfront, annual MIP varies by LTV and term.
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