FHA mortgage insurance

FHA mortgage insurance (MIP), explained

Every FHA loan requires mortgage insurance. It's not optional and not a sign of a shaky application — it's a standard part of the FHA program that allows the low down payment and flexible credit approval FHA is known for. Two premiums apply, one upfront and one ongoing.

Upfront MIP

1.75% of the base loan amount, charged once at closing
Almost always financed into the loan rather than paid out of pocket, which raises the loan balance slightly rather than requiring extra cash at closing
Example only, not a quote: on a $300,000 loan, upfront MIP is about $5,250, typically rolled into the loan balance
Borrowers who refinance into another FHA loan within three years may be eligible for a partial upfront MIP refund, applied to the new loan

Annual MIP

Paid monthly as part of the regular mortgage payment, not as a separate bill
For most 30-year FHA loans: 0.55% annually with the minimum down payment, 0.50% with 5% or more down
Example only, not a quote: on a $300,000 loan, that's roughly $137 to $150 a month depending on down payment
Exact rates depend on loan term, down payment, and loan amount — the figure on your Loan Estimate is the one that governs, not this page

Does FHA mortgage insurance ever go away?

With a down payment under 10%, annual MIP lasts for the life of the loan
With a down payment of 10% or more, annual MIP automatically drops off after 11 years
The most common way borrowers eliminate MIP is refinancing into a conventional loan once they reach roughly 20% equity, which removes FHA insurance entirely
FHA loans originated before June 3, 2013 follow older rules where MIP cancels automatically at 78% loan-to-value — relevant only if you're refinancing an older FHA loan

Why FHA charges MIP at all

MIP is what allows FHA to offer low down payments and flexible credit approval to borrowers who wouldn't qualify for conventional financing on those same terms. It protects the lender, not the borrower. That's context for why the cost exists — it's still a real cost, and it's a fair thing to ask about and compare.

MIP vs. conventional PMI

FHA MIP: upfront premium plus annual premium, life-of-loan on most minimum-down loans
Conventional PMI: no upfront premium, cancels automatically at 78% LTV, and removal can be requested at 80% LTV

Which one is cheaper depends on your credit score and down payment, so it's worth a side-by-side look rather than a generalization. See FHA vs. conventional for that comparison.