Costs & insurance
MIP (Mortgage Insurance Premium)
The mortgage insurance charged on FHA loans — an upfront premium of 1.75% plus an annual premium that, at minimum down payment, lasts the life of the loan.
What does MIP mean?
MIP is FHA's version of mortgage insurance, and it works differently from conventional PMI in one costly way: with the minimum 3.5% down, the annual premium doesn't cancel — it stays for the life of the loan. FHA charges an upfront premium of 1.75% (usually financed into the balance) plus that ongoing annual premium of roughly 0.55%, split monthly. The lasting nature of MIP is exactly why the standard FHA exit strategy is to build 20% equity and refinance into a conventional loan to shed the insurance entirely.
Common questions
How is MIP different from PMI?
MIP is FHA's insurance; PMI is conventional. The big difference: at minimum FHA down payment, MIP lasts the life of the loan, while PMI cancels at 20% equity.
How much is FHA MIP?
An upfront 1.75% premium financed into the loan, plus an annual premium of roughly 0.55% split into monthly payments.
How do I get rid of MIP?
With under 10% down, you refinance into a conventional loan once you have 20% equity. With 10%+ down, MIP drops off after 11 years.