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FHA Mortgage Insurance Premiums: Answering All Your FAQs

Key Learnings
  • MIP is a common factor in many different mortgage types
  • There are two different types of FHA MIP: upfront and an annual fee
  • You may be able to remove your MIP on your FHA loan
  • How much you can expect to pay in MIP
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What is FHA Mortgage Insurance?

FHA mortgage insurance is a type of insurance backed by the Federal Housing Administration (FHA). It's designed to protect lenders from default risk on FHA loans.

FHA mortgage insurance premiums are required for all borrowers who take out an FHA loan, regardless of the amount of down payment they make. With other mortgage types, such as conventional loans, MIP goes away after you own 20% equity in the home. The mortgage insurance premium can be paid in a lump sum or it can be rolled into the loan and paid over time.

How Much is the Annual MIP on FHA Loans?

The annual MIP for FHA loans is 0.55%, which is a sizable decrease from previous years. Before March 2023, the annual MIP was 0.85%. This change in law will save FHA borrowers a good $800 a year in fees, which will help homeownership become more affordable.

FHA MIP Chart for 15 Plus Year Terms

Mortgage Amount Loan-to-Value Ratio New MIP (bps) Old MIP (bps) Duration
Less than or equal to $726,200 Less than or equal to 90% 50 80 11 years
Less than or equal to $726,200 90%-95% 50 80 Mortgage term
Less than or equal to $726,200 Greater than 95% 55 85 Mortgage term
Greater than $726,200 Less than 90% 70 100 11 years
Greater than $726,200 90%-95% 70 100 Mortgage term
Greater than $726,200 Greater than 95% 75 105 Mortgage term

FHA MIP Chart for 15 Year or Less Terms

Mortgage Amount Loan-to-Value Ratio New MIP (bps) Old MIP (bps) Term Duration
Less than or equal to $726,200 Less than or equal to 90% 15 45 11 years
Less than or equal to $726,200 More than 90% 40 70 Mortgage term
Greater than $726,200 Less than or equal to 78% 15 45 11 years
Greater than $726,200 Less than 90% but greater than 78% 40 70 11 years
Greater than $726,200 Greater than 90% 65 95 Mortgage term

How Long Do You Have to Pay MIP on an FHA Loan?

FHA MIP used to work like private mortgage insurance (PMI) on conventional loans. Once you reached 20% equity, MIP would drop. However, post-2013, you can no longer cancel your MIP. There is an exception though, if you made a down payment of 10% or more, your MIP will drop after 11 years.

Can You Get Rid of FHA Mortgage Insurance?

Your origination date will play a large part in whether or not you can remove your MIP.

  • July 1991 to December 2000: If your origination date falls between these two markers, you can’t cancel your FHA mortgage insurance premiums.

  • January 2001 to June 3, 2013: MIP will be canceled once your loan-to-value ratio (LTV) is 78 percent.

  • June 3, 2013, to present: Your MIP will only be canceled once your mortgage is paid in full unless you made a down payment of at least 10 percent. If so, your MIP will be canceled after 11 years.

Additionally, you can explore refinancing to a conventional mortgage once you have 20% equity in your home.

If you’re set on using an FHA loan, it may be wise to save for a larger down payment (around 10%) to qualify for a lower monthly mortgage insurance premium payment.

At the end of the day, insurance premiums are a common part of many home loan options. Be sure to factor in MIP on FHA loans when determining your homebuying budget.

Written by:
Kelly Ranft
Loan Officer Development NMLS #1728619

Kelly’s extensive background in the banking industry and bachelor’s degree in finance helps her serve as an FHA and Conventional home loan expert while co-leading Paddio’s production training team. While she’s not lending her expertise to the Paddio team, Kelly loves to travel with her husband and two sons.

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