Every FHA loan carries mortgage insurance premiums (MIP): an upfront premium, usually financed into the loan, and an annual premium paid in monthly installments. If your original down payment was at least 10%, annual MIP generally ends after 11 years; with less than 10% down, it generally lasts for the life of the loan unless you refinance out of FHA.
Why FHA charges mortgage insurance
FHA's flexibility has to be paid for somehow. MIP funds the insurance pool that reimburses lenders when FHA loans default. That pool is what lets lenders accept a smaller down payment, lower credit scores, and higher debt ratios than they otherwise would.
MIP protects the lender, not you. It doesn't cover your payment if you lose your job. It's best thought of as part of the cost of using FHA — a cost worth comparing against the alternatives for your situation.
The two premiums
Upfront MIP (UFMIP)
A one-time premium charged at closing, figured as a percentage of the base loan amount. Most borrowers finance it into the loan rather than paying cash, though it can be paid at closing.
Annual MIP
A yearly premium divided into monthly installments and collected with your mortgage payment. The rate depends on your loan amount, down payment, and loan term.
HUD sets both premiums, and they change from time to time. Because they're part of the cost of credit, this site doesn't list them — Matthew will show your exact figures on a Loan Estimate, where they can be compared side by side with other options. Current premium information is published on HUD.gov.
Want a straight answer for your situation? Skip the call center — Matthew will review your credit, budget, and FHA options himself.
Talk with MatthewHow long annual MIP lasts
| Original down payment | Annual MIP duration (general rule) |
|---|---|
| At least 10% | Generally 11 years, then it drops off |
| Less than 10% | Generally for the life of the loan |
This rule applies to FHA loans with case numbers assigned since mid-2013. Older FHA loans followed different cancellation rules, so if you've had your loan for a long time, check your paperwork or ask Matthew. The rule looks at your original loan-to-value — paying the balance down later doesn't change which bucket you're in.
The 2023 annual MIP reduction
In March 2023, HUD lowered the annual MIP for most new FHA purchase and refinance loans. It was the first meaningful reduction in several years and made FHA more competitive with conventional loans for many borrowers with modest down payments. The upfront premium wasn't changed at that time.
If your FHA loan closed before the change, you kept the premium you started with. Some existing FHA borrowers explored an FHA streamline refinance to move to current premiums; whether that makes sense depends on the full cost of the refinance and the net tangible benefit rules. HUD updates its handbook regularly and lenders can add their own overlays, so Matthew will confirm the current guidelines for your file.
Getting rid of MIP later
If your annual MIP is set for the life of the loan, the main way out is to refinance into a conventional loan once you have enough equity and credit to qualify. Conventional mortgage insurance can be avoided with enough equity, or canceled later when the balance falls far enough relative to the home's value.
- Watch your equity — rising home values and principal paydown both help.
- Keep your credit in good shape; conventional pricing is more score-sensitive than FHA.
- Compare the refinance costs against the insurance you'd save — it has to be worth it.
- Ask Matthew to run the comparison when the time looks right.
Whether a refinance makes sense depends on the market, your credit, and your home's value at that time.
Where MIP shows up in your numbers
Annual MIP is included in the house payment an underwriter uses for your debt-to-income ratio, so it affects how much home you qualify for, not just what you pay each month. Financed upfront MIP increases your loan balance, which slightly reduces your equity at the start.
On your Loan Estimate, look for the upfront premium in the loan costs section and the annual premium listed as mortgage insurance in the projected payments table. Comparing FHA with a conventional quote means looking at both lines — and at how long each type of insurance is expected to last.
- Short time in the home? Duration matters less; the up-front and early costs matter more.
- Plan to stay a decade or more? Whether MIP lasts 11 years or the life of the loan can make a real difference.
- Expect your credit to improve? Starting with FHA and refinancing later is a common path.
MIP vs. conventional PMI
| FHA MIP | Conventional PMI | |
|---|---|---|
| Who sets it | HUD, same for all lenders | Private insurers; priced by credit and down payment |
| Upfront charge | Yes, usually financed | Usually no |
| Credit sensitivity | Low — same premium across most scores | High — lower scores pay noticeably more |
| When it ends | 11 years or life of loan, based on original down payment | Can be canceled as equity builds |
For borrowers with strong credit, PMI is often the lower-cost path. For borrowers with mid-range or lower scores, FHA's flat pricing can win. The FHA vs. conventional guide works through examples.
Frequently asked questions
Can I avoid MIP on an FHA loan?
No. All FHA loans carry upfront and annual MIP. Putting at least 10% down limits annual MIP to 11 years in most cases.
Is FHA upfront MIP refundable?
Part of the upfront premium may be credited toward a new FHA loan if you do an FHA-to-FHA refinance within a limited time after closing. It isn't refunded in cash.
Does MIP go away when I reach 20% equity?
Not on current FHA loans with less than 10% originally down. That automatic cancellation applies to conventional PMI, not FHA MIP.
Is MIP tax deductible?
Mortgage insurance deductibility has changed over the years under federal tax law. Ask a tax professional about your situation.
Do FHA streamline refinances carry MIP too?
Yes. A streamline is a new FHA loan, so upfront and annual MIP apply under the rules in effect when it closes, with a possible partial credit for recent upfront premiums.
Why doesn't this site list MIP percentages?
MIP is part of the finance charge on a loan, and exact figures depend on your file. Matthew will show them on a formal Loan Estimate.
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