What is FHA Mortgage Insurance?
FHA mortgage insurance premium, commonly called FHA MIP, is an added cost that comes with most FHA loans. It protects the lender if the loan is not repaid, but it also helps make FHA financing available to homebuyers with smaller down payments or credit challenges.
There are two parts to FHA mortgage insurance: an upfront premium and an annual premium. We'll walk through both costs, how the rates are determined and how long you may need to pay them.
In a Nutshell
- The upfront mortgage insurance premium is 1.75% of the base loan amount.
- Annual MIP rates range from 0.15% to 0.75%.
- Many buyers using the minimum 3.5% down payment on a 30-year FHA loan pay an annual rate of 0.55%.
- The annual premium is divided into monthly amounts and included in your mortgage payment.
- Unlike conventional loan mortgage insurance, MIP typically lasts for the life of the loan unless you put a 10% down payment at closing or refinance to a different loan type.
The Purpose of FHA Mortgage Insurance
FHA mortgage insurance protects FHA-approved lenders from some of the financial loss that could occur if a homeowner stops making payments.
The Federal Housing Administration does not lend you the money directly. Instead, it insures loans made by approved lenders. That protection allows lenders to offer FHA loans with features that can make homebuying more accessible, including a down payment as low as 3.5% for qualified buyers.
Mortgage insurance adds to the cost of the loan, so include it when comparing FHA and conventional loan financing.
How Does FHA MIP Work?
FHA loans include two mortgage insurance charges:
- An upfront mortgage insurance premium, or UFMIP
- An annual mortgage insurance premium, which is usually paid monthly
Although both are forms of FHA mortgage insurance, they are calculated and paid differently.
Upfront Mortgage Insurance Premium
The upfront mortgage insurance premium is 1.75% of your base loan amount.
You can pay it at closing or finance it by adding it to your FHA loan balance. Financing the premium reduces the amount you need to pay at closing, but it also means you will pay interest on that amount.
For example, an upfront premium on a $200,000 base loan would be:
$200,000 × 1.75% = $3,500
Annual Mortgage Insurance Premium
The annual MIP is an ongoing cost. Despite its name, you usually don't pay it as one yearly bill. Your mortgage servicer divides the premium into monthly amounts and includes it in your regular mortgage payment.
Your annual MIP rate depends on:
- The length of your loan
- Your original loan-to-value ratio
- Your base loan amount
The loan-to-value ratio, or LTV, compares your loan amount with the home's value. A larger down payment lowers your LTV.
2026 FHA MIP Rates
The tables below show the annual MIP rates for standard FHA loans in 2026.
The $726,200 dividing point is based on the 2026 national conforming loan limit. It determines the MIP rate tier and may differ from the FHA loan limit in your county.
FHA Loans With Terms Longer Than 15 Years
| Base Loan Amount | Original LTV | Approximate Down Payment | Annual MIP Rate | Payment Period |
|---|---|---|---|---|
| $726,200 or less | 90% or less | 10% or more | 0.50% | 11 years |
| $726,200 or less | More than 90% through 95% | 5% to less than 10% | 0.50% | Full loan term |
| $726,200 or less | More than 95% | Less than 5% | 0.55% | Full loan term |
| More than $726,200 | 90% or less | 10% or more | 0.70% | 11 years |
| More than $726,200 | More than 90% through 95% | 5% to less than 10% | 0.70% | Full loan term |
| More than $726,200 | More than 95% | Less than 5% | 0.75% | Full loan term |
FHA Loans With Terms of 15 Years or Less
| Base Loan Amount | Original LTV | Approximate Down Payment | Annual MIP Rate | Payment Period |
|---|---|---|---|---|
| $726,200 or less | 90% or less | 10% or more | 0.15% | 11 years |
| $726,200 or less | More than 90% | Less than 10% | 0.40% | Full loan term |
| More than $726,200 | 78% or less | 22% or more | 0.15% | 11 years |
| More than $726,200 | More than 78% through 90% | 10% to less than 22% | 0.40% | 11 years |
| More than $726,200 | More than 90% | Less than 10% | 0.65% | Full loan term |
How Much Does FHA MIP Cost?
Let's look at a simple example using a $250,000 home and the FHA minimum down payment of 3.5%.
Home price: $250,000
Down payment: $8,750
Base FHA loan amount: $241,250
Original LTV: 96.5%
Because the original LTV is above 95%, a standard FHA loan with a term longer than 15 years would have a 0.55% annual MIP rate.
Upfront MIP
$241,250 × 1.75% = $4,221.88
You could pay this amount at closing or add it to the loan. If you financed the entire premium, the initial loan balance would increase to approximately $245,471.88.
Estimated Monthly MIP
A simple first-year estimate would be:
$241,250 × 0.55% = $1,326.88 per year
$1,326.88 ÷ 12 = about $110.57 per month
This is an estimate. FHA calculates annual MIP using the expected average outstanding loan balance, so the actual amount may decline slightly as you pay down the principal.
Your full mortgage payment will also include principal, interest, property taxes and homeowners insurance. Use our FHA loan calculator to estimate your monthly payment, including MIP, taxes and insurance.
FHA MIP vs. Conventional PMI
FHA MIP and private mortgage insurance both help protect lenders, but they apply to different types of home loans.
| Feature | FHA MIP | Conventional PMI |
|---|---|---|
| Loan type | FHA loan | Conventional loan |
| When it is generally required | On most standard FHA loans | When the down payment is less than 20% |
| Upfront cost | 1.75% upfront MIP | No standard FHA-style upfront charge, although premium options can vary |
| Ongoing cost | Annual MIP, paid monthly | Usually paid monthly, although other structures may be available |
| What affects the rate | Loan term, original LTV and base loan amount | Credit, down payment, loan characteristics and insurer pricing |
| How long it lasts | Usually the full loan term | May be canceled when legal and servicing requirements are met |
PMI isn't automatically less expensive for every buyer. Its cost can vary significantly based on credit, down payment and other loan details.
When comparing FHA with conventional loans, look at the full picture: your estimated monthly payment, cash needed at closing, interest rate, mortgage insurance costs and how long you expect to keep the loan.
How Long Do You Pay FHA MIP?
For FHA case numbers assigned on or after June 3, 2013, the payment period generally depends on your original LTV:
- If the original LTV was 90% or less, you generally pay annual MIP for 11 years.
- If the original LTV was more than 90%, you pay annual MIP for the full loan term.
This decision is based on the LTV when the FHA loan begins. Reaching 20% equity later does not automatically cancel MIP on a newer FHA loan.
Can FHA Mortgage Insurance Be Removed?
There are a few ways FHA mortgage insurance can end, but your options depend on when you received the loan and your original down payment. Here are a few common scenarios that homeowners use:
Wait for the 11-Year Period to End
If your original down payment was at least 10%, your annual MIP should generally end after 11 years, provided the loan falls under the current rules.
Refinance Into a Conventional Loan
You may be able to refinance from an FHA loan into a conventional loan.
You don't necessarily need 20% equity to refinance, but a new conventional loan may require PMI if your equity is below the applicable threshold. To remove mortgage insurance entirely, you will generally need enough equity and must meet the lender's other qualification standards.
Refinancing creates a new loan and may include closing costs or a different interest rate. Make sure to compare the potential monthly savings with the cost of refinancing before deciding.
Sell the Home or Pay Off the FHA Loan
MIP ends when the FHA loan is paid in full, including when you sell the home or pay off the mortgage.
Check the Rules for an Older FHA Loan
FHA loans with case numbers assigned before June 3, 2013 may follow different cancellation rules.
Some older loans may qualify for cancellation after the balance reaches 78% of the property's original value. A minimum payment period may also apply, especially for loans with terms longer than 15 years.
Because the rules depend on the loan's dates and original terms, contact your mortgage servicer for the requirements that apply to your loan.
Is an FHA Loan Worth the Mortgage Insurance Cost?
FHA mortgage insurance is an added expense, but an FHA loan may still be a helpful path to homeownership when a smaller down payment or more flexible credit guidelines matter most.
A conventional loan could cost less over time for some buyers, particularly if they qualify for favorable pricing and can remove PMI sooner. For other buyers, an FHA loan may make it possible to purchase a home sooner with less cash upfront.
The strongest choice is the one that fits your current finances and your longer-term goals. Compare both the upfront cost and the estimated monthly payment rather than focusing on one rate or fee.
Frequently Asked Questions About FHA MIP
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Dan Bartelt has over 16 years of mortgage industry experience. He’s held roles as a loan officer and processor and has spent the past 8 years as an underwriter. Dan views underwriting as solving a puzzle—piecing together details to create a compelling loan story.