Video — How Does Reverse Mortgage Insurance Work?

HUD’s HECM program stipulates a mortgage insurance premium charged at closing based on the funds withdrawn during the initial year of the loan. As of 2016: if you take 60% or less of available funds in year 1 the MIP is 0.5% of appraised value if you take over 60%. MIP is raised to 2.5% of appraised value. In addition, HECM charges annual premiums of 1.25% of the outstanding loan balance which accrue over time and are due when the loan is called and payable. These percentages may change over time; ask your lender for current HECM rates.