Mortgage Insurance Premium (MIP) is required on every FHA loan. There are two parts: an upfront premium (UFMIP) of 1.75% of the loan amount, almost always financed into the loan, and an annual MIP of 0.15%–0.75% paid monthly with your mortgage.

Unlike conventional PMI, FHA MIP usually lasts for the life of the loan. The only exceptions are loans with 10%+ down (MIP drops off after 11 years) and 15-year loans with low LTV.

Many FHA borrowers refinance to a conventional loan once they reach 20% equity specifically to get rid of MIP. The savings often justify the refinance costs in just a year or two.

Related terms

Insurance

PMI

Insurance that protects the lender when you put less than 20% down on a conventional loan.

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Loan Programs

FHA Loan

A government-insured mortgage with flexible credit and low down-payment requirements.

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Underwriting

LTV Ratio

The loan amount divided by the home's value, expressed as a percentage.

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