Rocket Mortgage Sued Over FHA Insurance Calculations

A proposed class action filed October 5, 2026, in federal court in California accuses Rocket Mortgage of using the wrong FHA loan-to-value calculation. The complaint says Rocket includes the financed upfront insurance premium when determining the ratio, even though HUD’s method excludes it. That difference can move a borrower above the 90% threshold, changing insurance from an 11-year obligation to coverage lasting for the mortgage’s entire term.

The named borrower purchased a West Sacramento home in November 2021. His underlying FHA loan was $589,500 against a $655,000 appraisal, or 90%. After adding $10,316 in financed insurance, Rocket allegedly calculated the ratio at 91.57% and treated the insurance as lasting 30 years. The borrower says his original documents showed payments dropping after 11 years, but Rocket declined to revise the classification after several error notices and complaints to regulators. The filing also alleges that Rocket included refinancing solicitations in letters responding to those disputes. The proposed California class includes FHA borrowers whose qualifying ratio was 90% or less but who were assigned insurance for the loan’s full duration. The complaint says the case involves more than $5 million and estimates the named borrower’s additional premiums at about $81,000.