Does FHA mortgage insurance affect APR?
Yes. UFMIP and annual MIP are both included in the APR calculation, which is why FHA APR usually looks meaningfully higher than the note rate.
What this actually means.
Note rate is the cost of borrowing. APR adds certain finance charges — UFMIP, annual MIP, lender fees, and prepaid finance charges — to give a comparison number. APR is a useful comparison only when the assumptions match across quotes.
Where this can move.
Loan term, LTV at origination, HUD's published MIP schedule at the time of origination, and refinance options can change the long-term cost.
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Educational only. FHA guidelines, lender overlays, rates, fees, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with HUD, FHA, or any government agency.