Solano Real Estate Scene: Jim Porter
Article By: Jim Porter – July 17, 2026
Let’s look at the difference for a first-time home buyer with a 3.5% down payment and a loan amount of $500,000.
First of all, we all need to call our congressman, John Garamendi, and encourage him to lobby for HUD to revamp the government version of private mortgage insurance, called MIP (mortgage insurance premium).
All the private mortgage insurance companies in America are operating in the 21st century and have updated their pricing structure based on risk while HUD is selling MIP at the same price regardless of risk.
FHA charges a 1.75% up-front nonrefundable fee plus an annual cost of .55% for MIP, which is paid monthly. This cost is exactly the same for 620 FICO and 720 FICO score buyers. This is stupid and like charging the exact same auto insurance premium to a driver with three speeding tickets as someone with a spotless record.
Now, don’t get me wrong; I am not saying HUD should charge more MIP to low-income families with 620 FICO scores. As a matter of fact, FHA MIP is substantially cheaper than PMI for FICO-challenged families. But for years now, HUD has been sitting on nearly 600% of the cash reserves congressionally mandated. As of September 2025, the HUD MMI Fund had a capital reserve ratio of 11.47%, an all-time high. The congressional mandate is 2%, which was created in 1990. They have $189 billion in cash reserves, because as far as I am concerned, HUD has made an unconscionable profit over the past seven or eight years on low- to moderate-income families.
I estimate that more than 150,000 FHA homebuyers that purchased between 2012 and 2020 refinanced out of their FHA loan and into conventional loans with no PMI after paying HUD a 1.75% MIP fee.
HUD increased the upfront MIP to 1.75% from 1% in 2012, which was understandable after the crash and the reverse mortgage losses with home values crashing as a result of the Wall Street-funded mortgage scam from 2003 to 2007. But the U.S. housing market was fully recovered by 2017, and they are still charging a 1.75% upfront MIP fee and monthly MIP for the life of the loan.
Today, a $500,000 FHA loan will cost a 720 FICO score family $8,750 in up-front MIP plus a monthly MIP payment of $233 for the life of the loan. That same 720 FICO score family will only pay a monthly PMI cost of $233 with no up-front fee for a $500,000 conventional loan, and can have the monthly PMI removed as soon as the loan amount is under 80% loan to value in two to six years.
A 760 FICO buyer will pay only $133 per month for PMI and again will not have to pay the PMI company a fee of $8,750. HUD can make housing more affordable in two weeks if they wake up and update the FHA MIP factors.
Jim Porter, NMLS No. 276412, is the branch manager and senior loan adviser of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
