Upfront FHA MIP on a reverse mortgage is 2.00% of maximum claim amount on every HECM, per HUD Mortgagee Letter 2017-12, for case numbers assigned on or after 2 October 2017. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. The old 0.50%/2.50% split tied to first-year draws is revoked. Staying under 60% of principal limit in year one does not cut initial MIP. It only limits how much you may draw.
Take a homeowner like Lark, 78, occupying a house in Flagstaff, Arizona, who brought a printout promising “half-percent MIP if you wait on draws.” That printout is teaching a dead schedule. See the first-year disbursement limit for the 60% rule that still exists. Stay here for the origination insurance premium.
A HECM remains FHA-insured. Initial MIP is not a public rebate you earn by waiting.
What is 2.00% of maximum claim amount in actual dollars?
Maximum claim amount is the lesser of appraised value and the national HECM cap. For 2026 case numbers that cap is $1,249,125 per Mortgagee Letter 2025-22. On a $750,000 home below the cap, initial MIP is $15,000. On an $800,000 home it is $16,000. At the cap it is $24,982.50, often shown to the nearest dollar as $24,983. That arithmetic is 2.00% times claim amount, not 2.00% times leftover cash.
Lark’s leftover proceeds still sit in a mid-30s to low-50s percent of appraised value, depending on age and expected rate, after this 2.00% and other costs. I will not quote a live PLF cell. Run the leftover-cash worksheet. Do not interpolate HUD rows.
Counseling still costs $125–$175. The HUD certificate lasts 180 days. Honor Arizona’s process; California files still honor Civil Code 1923.2(k)‘s seven days before a complete application. Neither rule changes the 2.00%.
Why does the 60% first-year draw cap not change initial MIP anymore?
Mortgagee Letter 2017-12 superseded the MIP section of Mortgagee Letter 2014-21. It left the first-year disbursement limit in 24 CFR 206.25. Mixing those two letters is how people invent an $11,250 “savings” that is not in current law. Annual MIP of 0.50% of outstanding balance still accrues after closing. Origination is still capped at $6,000 under 24 CFR 206.31.
A second geography: a 67-year-old in Ventura whose California seminar binder still showed 0.50% MIP. Same revoked schedule. Same 2.00% of claim amount on a 2026 case number.
If residual income requires a LESA, that set-aside is origination-only. Jay confirmed it cannot be modified after closing. A LESA does not buy a lower initial MIP.
On a HECM-to-HECM refinance, 24 CFR 206.53(c) credits MIP already paid when new initial MIP is calculated. There is no cash refund if the credit exceeds the new charge. See the refinance process.
How is initial MIP different from proprietary “no MIP” pricing?
Proprietary programs Jay closes — HomeSafe, Longbridge Platinum, Finance of America, Mutual of Omaha Secure Equity — are not FHA-insured and do not charge this 2.00% HECM initial MIP. They have their own pricing. Compare a Loan Estimate. Do not assume “no MIP” means cheaper leftover cash after a higher rate or a higher origination.
An adjustable HECM still accrues after closing at 1-month CMT plus lender margin. Expected rate still rounds to 0.125% under 24 CFR 206.3 and already drove the principal-limit factor. I still quote a typical close near 30 days after a complete refinance file. Initial MIP is charged on that new case number, subject to the 206.53(c) credit when it applies.
If Lark’s heirs later keep the Flagstaff house, 24 CFR 206.125(a)(2)(i) still names the then-outstanding balance. Initial MIP already sitting in that balance is not rebated to the estate.
What happens to initial MIP if I rescind within three days?
12 CFR 1026.23 gives a right of rescission on a refinance HECM that is a principal dwelling. If Lark rescinds on time, the transaction unwinds and she is not supposed to keep a 2.00% MIP charge as a souvenir. I will not treat rescission as a planning tool. I will treat it as a statutory unwind. Purchase files follow their own TRID clock.
The revoked 0.50%/2.50% MIP split still does not return if she waits until day four and then draws less. Mortgagee Letter 2017-12 already charged 2.00% of claim amount. Year-one 24 CFR 206.25 still caps draws. Those are different knobs. If leftover cash after $15,000 of MIP on a $750,000 Flagstaff value is decorative, rescission is not the lesson — skipping origination is.
Who should not shop a 2016 MIP table as if it were 2026 law?
This path does not help a household that wanted the revoked 0.50% initial MIP as the reason to originate. Occupancy is still 24 CFR 206.39. I work with multiple lenders. I will originate when leftover cash after 2.00% of claim amount is worth the insurance. I will turn away a file whose only thesis is a dead MIP discount.
If leftover cash after 2.00% of claim amount is decorative, skip the HECM. The upfront premium is the insurance price of the FHA structure, not a lever you still pull by waiting until month thirteen to draw.
Lark’s Flagstaff printout of 0.50% initial MIP is a museum piece. 2026 case numbers pay 2.00% of claim amount. On $750,000 that is $15,000. Staying under 60% in year one does not change that premium. It only changes how much she may draw. Run leftover cash with the current premium, then decide.