Interest Charge Calculation

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Interest will be charged on any premium not received by the end of the month in which it was due. Interest will be charged per month based on the number of days in that month. Interest will be billed on past due premium (one or more months late) at the Treasury Value of Funds Rate effective during the billing period. If all past due charges including late and interest charges are received by HUD by the end of the month in which billed, interest will NOT be charged.

The interest formula is the past due premium amount multiplied by the daily interest rate factor (annual interest rate expressed as a decimal divided by 365, rounded to the fourth place to the right of the decimal), multiplied by the number of days in the overdue month (based on number of days in the month - 28, 29, 30 or 31). To get to two decimal places, truncate at the third decimal place and round to the second decimal place.

See additional monthly premiums late and interest charge examples (.pdf).

Questions and answers concerning interest charges are available in the Answers to Mortgagee Questions Premium/Late/Interest section.

See also Premium Calculation and Late Charge Calculation.