Which loan type does MIP specifically apply to?

The correct answer is FHA loans. Mortgage Insurance Premium (MIP) is a specific type of insurance that borrowers are required to pay as part of their FHA (Federal Housing Administration) loan. This insurance protects the lender in case the borrower defaults on the loan. MIP is applicable to all FHA loans, making it an essential component of the loan’s structure.

In contrast, VA loans do not require mortgage insurance, as they are backed by the Department of Veterans Affairs and come with their own set of benefits and protections for veterans. Conventional loans may require private mortgage insurance (PMI) when the down payment is less than 20%, which is different from MIP. Reverse mortgages, designed for homeowners over the age of 62, also do not involve MIP in the same way as FHA loans, since they operate under a different set of guidelines and insurance requirements.

Thus, MIP is specifically associated with FHA loans, marking them as distinct in the realm of mortgage insurance requirements.