Written by the Simply Approved Mortgages editorial team
Reviewed for program accuracy by our Simply Approved Mortgages underwriting desk — Licensed mortgage originators (NMLS) — Colorado & Florida. We summarize published federal program rules; we do not set them. This article is educational and is not a quote, approval, or commitment to lend.
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FHA loans require mortgage insurance — but FHA's version isn't called PMI, it's called MIP (Mortgage Insurance Premium). There are two pieces.
Upfront MIP (UFMIP)
- 1.75% of the loan amount
- Charged at closing
- Almost always financed (added to your loan balance) rather than paid in cash
- On a $400,000 base loan, that's $7,000 — making your actual loan balance $407,000
Annual MIP
Charged monthly as 1/12 of the annual rate. The rate depends on three things: loan term, base loan amount, and LTV at origination.
For 30-year FHA loans:
| LTV | Loan ≤ $726,200 | Loan > $726,200 |
|---|---|---|
| ≤ 90% | 0.50% | 0.70% |
| > 90% to 95% | 0.50% | 0.70% |
| > 95% (typical 3.5% down) | 0.55% | 0.75% |
For 15-year FHA loans:
| LTV | Loan ≤ $726,200 | Loan > $726,200 |
|---|---|---|
| ≤ 78% | 0.15% | 0.40% |
| > 78% to 90% | 0.40% | 0.65% |
| > 90% | 0.40% | 0.65% |
(Annual MIP rates per HUD Mortgagee Letter 2023-05, in effect for 2026.)
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How long MIP stays on your loan
- 3.5% down (LTV > 90%): MIP lasts the life of the loan
- 5%+ down (LTV ≤ 90%): MIP drops off after 11 years
To remove MIP on a 3.5%-down FHA loan, you have to refinance into a conventional. You generally want to do that once you reach 20% equity AND your credit is at 680+.
What MIP actually costs on a typical loan
$400,000 base FHA loan, 30-year, 3.5% down, 740 FICO:
- Upfront MIP financed: $7,000 → final loan = $407,000
- Annual MIP: 0.55% × $407,000 = $2,238/yr = $186.50/mo
- Over the first 7 years (typical hold period): $7,000 + $15,666 = $22,666 in MIP
That's why we model FHA vs conventional carefully on every quote — if your credit is high enough, the conventional path is often $5,000–$15,000 cheaper over 7 years.