source:
  type: guide
  id: hud-4000-1-iii-k-mortgage-insurance-premium-cancellation
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — k. Mortgage
    Insurance Premium Cancellation (09/26/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — k. Mortgage
    Insurance Premium Cancellation (09/26/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-k-mortgage-insurance-premium-cancellation-full
  canonical_id: hud-4000-1-iii-k-mortgage-insurance-premium-cancellation-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — k. Mortgage
    Insurance Premium Cancellation (09/26/2022)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — k. Mortgage
      Insurance Premium Cancellation (09/26/2022)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'k. Mortgage Insurance Premium Cancellation (09/26/2022) i. Definition
      MIP Cancellation is the end of the obligation to remit the FHA MIPs to HUD on
      an FHA-insured Mortgage closed on or after January 1, 2001 and assigned a case
      number before June 3, 2013. ii. Standard The policies in this section apply
      only to FHA-insured Mortgages that: • closed on or after January 1, 2001; and
      • have a case number assignment before June 3, 2013. HUD automatically cancels
      FHA MIPs under the conditions set forth below. The Loan- to-Value (LTV) ratio
      is based on the principal balance excluding Upfront MIP (UFMIP). The FHA contract
      of insurance remains in force for the Mortgage’s full term, unless otherwise
      terminated. HUD will not consider new appraised values in calculating if the
      Borrower has reached the required LTV ratio necessary for annual MIP cancellation.
      HUD bases the cancellation of the annual MIP on the initial amortization schedule.
      In cases where Mortgage Payments have been accelerated or modified, HUD may
      base cancellation on the actual amortization of the Mortgage as provided to
      HUD by the servicing Mortgagee. (A) Mortgage Term of More Than 15 Years For
      Mortgages with terms more than 15 years, HUD automatically cancels the annual
      MIP when the LTV ratio reaches 78 percent of the lesser of the initial sales
      price or appraised value at origination, provided the Borrower has paid the
      annual MIP for at least five years. (B) Mortgage Term 15 Years or Less and LTV
      Ratio of Greater than 90 Percent with Case Numbers Assigned on and after July
      14, 2008, and before June 3, 2013 HUD automatically cancels the annual MIP when
      the LTV ratio reaches 78 percent of the lesser of the initial sales price or
      appraised value at origination regardless of the length of time the Borrower
      has paid the annual MIP for Mortgages that: • have terms 15 years or less; III.
      SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
      1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1179 Last Revised: 11/26/2025
      • have a case number assigned on and after July 14, 2008, and before June 3,
      2013; and • have LTV ratios greater than 90 percent. (C) Mortgage Term 15 Years
      or Less and LTV Ratio of 90 Percent and Greater, Closed on or after January
      1, 2001, and with Case Numbers Assigned before July 14, 2008 HUD automatically
      cancels the annual MIP when the LTV ratio reaches 78 percent of the lesser of
      the initial sales price or appraised value regardless of the length of time
      the Borrower has paid the annual MIP for Mortgages that: • have terms 15 years
      or less; • closed on or after January 1, 2001, but have their case number assigned
      before July 14, 2008; and • have LTV ratios 90 percent or greater. (D) Mortgage
      Term 15 Years or Less and LTV Ratio Greater than 78 percent but Equal to or
      Less Than 90 Percent HUD automatically cancels the annual MIP when the LTV ratio
      reaches 78 percent of the lesser of the initial sales price or appraised value
      at origination regardless of the length of time the Borrower has paid the annual
      MIP for Mortgages that: • have terms 15 years or less; • have case numbers assigned
      on or after April 18, 2011; and • have LTV ratios of greater than 78 percent
      but equal to or less than 90 percent. HUD does not charge annual MIP for Mortgages
      that: • have terms 15 years or less; have a case assigned on or after April
      18, 2011, but before June 3, 2013; and have LTV ratios of 78 percent or less;
      • have terms 15 years or less; have a case number assigned on or after July
      14, 2008 but before April 18, 2011; and have LTV ratios of 90 percent or less;
      or • have terms 15 years or less; closed on or after January 1, 2001 and have
      a case number assigned before July 14, 2008; and have LTV ratios of less than
      90 percent. (E) Borrower-Initiated Cancellation of MIP A Borrower who meets
      the following requirements may request cancellation of the collection of annual
      MIPs through their Mortgagee when: • the Borrower has reached the 78 percent
      threshold in advance of the scheduled amortization due to Borrower prepayments
      to the principal, but not sooner than five years from the date of origination,
      except for 15-year term Mortgages; and III. SERVICING AND LOSS MITIGATION A.
      Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured
      Mortgages Handbook 4000.1 1180 Last Revised: 11/26/2025 • the Borrower has not
      been more than 30 Days Delinquent on the Mortgage during the previous 12 months.
      As part of the Mortgagee’s annual disclosures to Borrowers, Mortgagees must
      notify Borrowers of their option to cancel the annual MIP in advance of the
      projected amortization date by making additional payments of mortgage principal.
      (F) Processing MIP Cancellation The Mortgagee must process the MIP cancellation
      using the Monthly MIP cancellation function in FHAC. iii. Cancellation of MIP
      on Mortgages with Case Numbers Assigned on or after June 3, 2013 For Mortgages
      with FHA case numbers assigned on or after June 3, 2013, HUD automatically cancels
      FHA MIP as stated in Appendix 1.0 – Mortgage Insurance Premiums. iv. Distributive
      Shares (A) Definition A Distributive Share is a share of any excess earnings
      from the Mutual Mortgage Insurance Fund (MMIF) that may be distributed to a
      Borrower after mortgage insurance termination. (B) Payment of Distributive Shares
      At HUD’s discretion, HUD may pay Distributive Shares when mortgage insurance
      is terminated. Upon termination of the FHA mortgage insurance of a Mortgage,
      HUD will determine if Distributive Shares are available. HUD is not liable for
      unpaid Distributive Shares that remain unclaimed six years from the date notification
      was first sent to the Borrower’s last known address.'
  judgment: false
