Every FHA borrower pays mortgage insurance, and almost every guide to it prints the same rate chart. The chart is usually right about the rates and wrong about one number underneath them. DollarVisor takes no lender money, so nothing here is written to make an FHA loan look cheaper than it is.
The part worth your attention is not the rate. It is the duration rule, decided once at closing by your loan-to-value ratio and never revisited. Two borrowers with the same rate can pay $20,000 apart on the same FHA loan because one crossed a line on the day they signed.
Mortgage Insurance Explained How to Remove your Mortgage Insurance
Source video: Tim Tomkowiak on YouTube
1What FHA MIP Is: Two Premiums, Not One
Quick Answer: FHA MIP is the mortgage insurance every FHA borrower pays. It has two pieces: an upfront premium of 1.75 percent of the base loan, and an annual premium collected monthly. Both protect the lender, not you. See how the rest of the loan works in our guide to mortgages.
The two premiums follow different rules, which is why lumping them together hides most of the cost.
- Upfront MIP (UFMIP). A one-time 1.75 percent of the base loan amount, due at closing on effectively every FHA purchase loan. Most borrowers roll it into the loan.
- Annual MIP. A percentage of the balance charged yearly and split into 12 monthly pieces. This is the mortgage insurance line on your statement.
Both come from the same source: HUD Mortgagee Letter 2023-05, which set the rates in force for loans endorsed on or after March 20, 2023. Those rates still govern 2026 loans, and neither premium is negotiable.
2The Upfront Premium: 1.75% of the Base Loan
Quick Answer: The upfront premium is 1.75 percent of the base loan, regardless of credit score, down payment, or term. On a $328,100 loan that is $5,741.75. You can pay cash or finance it, and most buyers finance. It appears on your Loan Estimate and Closing Disclosure as its own line.
Take a $340,000 purchase with the FHA minimum of 3.5 percent down. Your down payment is $11,900 and your base loan is $328,100. At 1.75 percent, the upfront premium is $5,741.75. Finance it and your loan becomes $333,841.75, more than the price of the house.
That last point catches people. Financing the premium is convenient, but you pay interest on it for as long as you keep the loan. At 6.25 percent over 30 years, that adds roughly $6,600.
Three details that change the arithmetic:
- It is charged on the base loan, not the price. A bigger down payment shrinks it.
- It is not part of your LTV test. HUD measures loan-to-value on the base loan, so financing it does not push you into a worse annual rate.
- Seller credits can cover it. The upfront premium is a closing cost, so seller concessions or lender credits can absorb it within FHA limits.
Not sure what price this loan supports?
The premium sits inside the same ratio lenders test you against. Run the 28/36 rule math →
3The 2026 Annual MIP Rates, Straight From HUD
Quick Answer: Annual FHA MIP runs from 0.15 percent to 0.75 percent of the balance. On a 30-year loan under the conforming limit, it is 0.50 percent with 10 percent down and 0.55 percent below that. Fifteen-year terms drop to 0.15 percent. The loan you choose decides the row.
Three inputs pick your rate: loan term, loan-to-value at origination, and base loan size. Credit score does not move it. Neither does the lender.
| Mortgage term | Base loan vs. conforming limit | LTV at origination | Annual rate | Duration |
|---|---|---|---|---|
| Over 15 years | At or under | 90% or less | 0.50% | 11 years |
| Over 15 years | At or under | Over 90% up to 95% | 0.50% | Full term |
| Over 15 years | At or under | Over 95% | 0.55% | Full term |
| Over 15 years | Above | 90% or less | 0.70% | 11 years |
| Over 15 years | Above | Over 90% | 0.70% to 0.75% | Full term |
| 15 years or less | At or under | 90% or less | 0.15% | 11 years |
| 15 years or less | At or under | Over 90% | 0.40% | Full term |
| 15 years or less | Above | Over 90% | 0.65% | Full term |
Source: HUD Mortgagee Letter 2023-05, rates effective March 20, 2023 and current for 2026 endorsements.
Read the last column first. The rate gaps are small. The duration gaps are not.
4The Loan-Size Threshold Most Charts Get Wrong
Quick Answer: Most rate charts online still print $726,200 as the line between the cheaper and dearer rate tiers. That was the 2023 conforming loan limit. HUD tied the threshold to the national conforming limit, which is $832,750 for 2026, so the line has moved more than $100,000 since those charts were written.
Mortgagee Letter 2023-05 did two things. It cut annual rates by 30 basis points, which everyone reported. It also “amends the Base Loan amount threshold used to establish MIP rates to the national conforming loan limit,” which almost nobody did. The letter lists $726,200 only because that was the conforming limit the day it was signed. The threshold moves with the limit each year.
For 2026 the national conforming limit is $832,750, and HUD built its FHA loan limits on that figure: a floor of $541,287 and a high-cost ceiling of $1,249,125 for a one-unit home, effective for case numbers assigned on or after January 1, 2026.
That matters in two places:
- Most of the country never reaches the higher tier. In counties at the FHA floor, the maximum one-unit loan is $541,287. The 0.70 and 0.75 percent rows are unreachable.
- High-cost counties are where it bites. Only in expensive metros of California, New York, Massachusetts, Washington and Colorado, plus the special exception areas, can an FHA loan exceed $832,750.
5When FHA MIP Ends: 11 Years or the Full Term
Quick Answer: On a loan longer than 15 years, FHA MIP stops after 11 years if your loan-to-value at origination was 90 percent or less. Above 90 percent it runs the full term. The test uses day-one LTV and is never re-run, so your down payment at closing decides it permanently.
Ten percent down is the line. At exactly 10 percent your LTV is 90 percent, you land in the 11-year row, and the premium falls away in year twelve. At 9.9 percent down you pay for 30 years.
The rule covers case numbers assigned on or after June 3, 2013. Older loans use different rules, so ask your servicer which applies.
What does not end the premium:
- Reaching 20 percent equity. There is no equity-based cancellation in the life-of-loan tier. Your house can double in value and the charge continues.
- Paying the balance down to 78 percent. That threshold governs conventional PMI only.
- A new appraisal. HUD does not re-test LTV after closing for this purpose.
- Asking your servicer. None can cancel a premium HUD requires.
6Why Extra Principal Payments Do Not Cut Your MIP
Quick Answer: HUD calculates your annual MIP from the average balance on the original amortization schedule, not your real balance. Send an extra $250 a month and your actual balance drops faster, but the premium is billed off the schedule you signed. You pay the same MIP either way.
This comes from HUD’s own worked example. The monthly premium calculation starts with the average outstanding balance “based on the original amortization schedule,” then applies the annual rate and divides by 12.
The table below runs the $328,100 example two ways: the scheduled payment, and an extra $250 a month. The premium column is identical, because HUD never looks at the second column.
| End of year | Balance on schedule | Balance paying $250 extra | MIP charged that year | Relative size of that year’s MIP |
|---|---|---|---|---|
| Year 3 | $321,335 | $311,464 | $1,750 | |
| Year 5 | $311,599 | $294,044 | $1,699 | |
| Year 10 | $281,221 | $239,690 | $1,540 |
Illustrative scenario modeled on HUD’s published premium formula, 2026. Not a quote.
By year 10 that borrower owes $41,531 less and sits near 70 percent loan-to-value, yet still pays $1,540 that year. The premium answers to the schedule, not to them.
7What FHA MIP Costs Year by Year on a $328,100 Loan
Quick Answer: On a $328,100 FHA loan with the premium financed, annual MIP starts near $1,795, or about $150 a month, and falls slowly as the scheduled balance drops. By the end of year 11 the borrower has paid $18,284 in annual premiums, plus the $5,742 upfront. Test your own figures in our mortgage calculator.
The slow decline is the point. Because the charge tracks a 30-year schedule, the early years barely move.
| Year | Monthly MIP | MIP that year | Cumulative MIP |
|---|---|---|---|
| 1 | $149.58 | $1,795 | $1,795 |
| 2 | $147.77 | $1,773 | $3,568 |
| 3 | $145.84 | $1,750 | $5,318 |
| 4 | $143.78 | $1,725 | $7,044 |
| 5 | $141.60 | $1,699 | $8,743 |
| 6 | $139.27 | $1,671 | $10,414 |
| 7 | $136.79 | $1,641 | $12,056 |
| 8 | $134.16 | $1,610 | $13,665 |
| 9 | $131.35 | $1,576 | $15,242 |
| 10 | $128.36 | $1,540 | $16,782 |
| 11 | $125.19 | $1,502 | $18,284 |
Illustrative scenario, DollarVisor modeling on HUD’s premium formula, 2026. Not a quote.
Eleven years in, this borrower has paid $24,026 in mortgage insurance and still owes the premium every month for another 19 years.
83.5% Down vs 10% Down: The Real MIP Gap
Quick Answer: On the same $340,000 house, the 3.5 percent down buyer pays about $40,868 in total mortgage insurance across 30 years. The 10 percent down buyer pays about $20,857 and is done in 11 years. The extra $22,100 at closing saves roughly $20,000 in premiums.
Three paths on one house, run to the point where the insurance stops. The conventional column models private mortgage insurance at 0.50 percent a year, a mid-range figure for strong credit, not a quote.
| Measure | FHA, 3.5% down | FHA, 10% down | Conventional, 10% down |
|---|---|---|---|
| Cash down at closing | $11,900 | $34,000 | $34,000 |
| Upfront premium | $5,742 | $5,355 | None |
| Annual rate | 0.55% | 0.50% | 0.50% modeled |
| When it ends | Never, unless you refinance | Year 11 | Month 92, at 80% LTV |
| Total mortgage insurance | $40,868 | $20,857 | $11,730 |
Illustrative scenario, DollarVisor modeling, 2026. FHA rates per HUD; conventional rate modeled. Not a quote.
The conventional column looks cheapest here and often is not, because FHA loans carry easier credit terms. Weigh the whole package in our FHA and conventional comparison.
Deciding between FHA and conventional?
The cheapest insurance does not always win. Compare first-time buyer programs by state →
9How FHA MIP Differs From Conventional PMI
Quick Answer: Conventional private mortgage insurance has a legal off-ramp; FHA MIP mostly does not. Federal law requires a servicer to drop PMI at 78 percent of original value, and to honor a written request at 80 percent. FHA borrowers in the life-of-loan tier have no equivalent right.
The CFPB states the conventional rules plainly: you can ask your servicer to cancel PMI at 80 percent of original value, it cancels automatically at 78 percent, and it ends at the midpoint of the term regardless. Those Homeowners Protection Act rights do not reach FHA loans.
Three differences that matter when you are choosing:
- The upfront charge. FHA takes 1.75 percent at closing. Monthly PMI has no upfront premium.
- Credit sensitivity. PMI pricing moves sharply with your score, so a strong credit score for buying a house can beat FHA pricing outright. The FHA rate ignores your score.
- The exit. PMI ends on a schedule you can calculate today. The FHA version ends when you refinance, sell, or pay the loan off.
10The Way Out: Refinance, and the Refund Window
Quick Answer: Refinancing into a conventional loan is the only way to end life-of-loan FHA MIP. You need enough equity to clear 80 percent loan-to-value on a fresh appraisal, and a rate that does not cost more than the premium saves. Timing the refinance is the whole game.
There is a second, narrower door. Refinance from one FHA loan into another and part of your original upfront premium can be credited toward the new one, briefly. HUD is direct: for loans endorsed on or after December 8, 2004, no refund is due unless you refinance into a new FHA-insured loan, and none after the third year. The credit shrinks the longer you wait.
How to work out whether refinancing out of the premium pays
Run these four steps before you apply. They take about twenty minutes.
- Find your current premium. Multiply your scheduled balance by the annual rate and divide by 12. That is what you are trying to stop paying.
- Estimate your loan-to-value honestly. Use a recent sold comparable, not a listing price. Refinancing without new insurance needs 80 percent or better.
- Price the new loan against the old one. Compare the new payment against the old payment minus the premium. A higher note rate can wipe out the saving.
- Divide closing costs by the monthly saving. That gives the break-even in months. If you expect to move before then, stay where you are.
11The Bottom Line
Quick Answer: Mortgage insurance on an FHA loan costs 1.75 percent upfront plus 0.50 to 0.55 percent a year for most buyers, and the duration is set by your down payment on closing day. Ten percent down buys an 11-year exit. Anything less means paying until you refinance or sell.
The FHA program exists to get people into houses they could not otherwise finance, and the premium is the price of access. Fair trade when the alternative is renting three more years. Poor trade when you had 10 percent available and put down 3.5 because nobody explained the cliff.
Do the down-payment comparison first, rate shopping second. The rate you can renegotiate later. The loan term and the premium duration you cannot.
12Frequently Asked Questions
1. How much is FHA MIP in 2026?
The upfront premium is 1.75 percent of the base loan amount for every borrower. The annual premium runs from 0.15 percent to 0.75 percent depending on term, loan size, and loan-to-value. Most 30-year borrowers pay 0.55 percent with the minimum down payment, or 0.50 percent with 10 percent down.
2. Does FHA MIP ever go away?
Only if your loan-to-value at origination was 90 percent or less, in which case it stops after 11 years. Above 90 percent it lasts the full term. Selling, paying off, or refinancing conventional are the other exits.
3. Can I cancel the premium once I reach 20 percent equity?
No. There is no equity-based cancellation right in the life-of-loan tier, and your servicer cannot waive it. Rising home values do not help, which is why refinancing out of FHA is the usual route.
4. Does paying extra principal reduce the premium?
No. HUD computes it from the average balance on the original amortization schedule, so extra payments do not lower it. They still cut your interest and shorten the loan.
5. Can I get a refund of my upfront premium?
Only by refinancing into another FHA-insured loan, within three years of the original endorsement. HUD credits it toward the new upfront premium rather than paying cash, and the amount falls the longer you wait.
6. Is the mortgage insurance premium tax deductible?
The mortgage insurance premium deduction expired for tax years after 2021 and has not been restored. Check current IRS guidance or a tax professional first, because this provision has lapsed and returned several times.
Not sure which MIP row your loan lands in?
Send us your loan amount, down payment, and term. We will tell you the annual rate, whether the 11-year clock applies, and what the premium costs you over the life of the loan.
This article is for general information and is not financial advice. FHA rules and premium rates change. See our disclaimer.