What Is FHA Mortgage Insurance Premium (MIP)?
FHA Mortgage Insurance Premium (MIP): FHA's mortgage insurance: 1.75% upfront plus an annual premium paid monthly.
Also called: MIP, UFMIP
FHA loans require a mortgage insurance premium (MIP) to fund the FHA insurance that protects lenders.
Two parts
- Upfront MIP (UFMIP): 1.75% of the base loan amount, usually financed into the loan
- Annual MIP: paid monthly; most 30-year FHA loans pay 0.50% to 0.55% a year, depending on the down payment and loan amount
Example
A $300,000 base loan has $5,250 of upfront MIP, making the loan $305,250. At 0.55% a year, the monthly MIP is about $140.
How long it lasts
- Less than 10% down: for the life of the loan
- 10% or more down: 11 years
Good to know
Because FHA MIP often can't be cancelled, many borrowers refinance into a conventional loan once they have about 20% equity.