Mortgage Insurance Premium (MIP): 2026 FHA Rates Explained
Last updated 06/12/2026 by
Ante Mazalin
Edited by
Andrew Latham
Summary:
A mortgage insurance premium (MIP) is the fee FHA borrowers pay to insure their loan against default.
It comes in two parts and protects the lender, not the borrower.
- Upfront MIP: A one-time charge of 1.75% of the loan amount, usually rolled into the loan.
- Annual MIP: An ongoing fee paid monthly, most often 0.55% per year.
- Applies to: Loans backed by the Federal Housing Administration.
- Removal: Often lasts the life of the loan unless you put 10% down or refinance.
If you are using an FHA loan to buy a home, mortgage insurance is part of the deal. It is the trade-off that lets the program accept lower credit scores and small down payments.
What a mortgage insurance premium is
A mortgage insurance premium is a fee that insures an FHA loan against borrower default. It protects the lender, which is why the FHA can approve buyers who put down as little as 3.5%.
MIP is specific to FHA loans. Conventional loans use private mortgage insurance instead, which follows different rules.
Pro Tip
If your credit and equity have improved since you bought, run the numbers on refinancing out of an FHA loan. Replacing MIP that lasts the life of the loan with cancellable PMI, or no insurance at all, can save thousands over time.
Upfront and annual MIP rates
FHA mortgage insurance has two pieces. An upfront premium is charged at closing, and an annual premium is spread across your monthly payments.
The upfront MIP is 1.75% of the base loan amount and the annual MIP is 0.55% for most borrowers, according to the U.S. Department of Housing and Urban Development. The exact annual rate depends on your loan size, term, and loan-to-value ratio.
| Premium | Rate | How it is paid |
|---|---|---|
| Upfront MIP | 1.75% of the loan | One time at closing, usually financed into the loan |
| Annual MIP (most loans) | 0.55% per year | Divided into 12 monthly payments |
| Annual MIP range | 0.15% to 0.75% | Varies by loan amount, term, and down payment |
On a $300,000 loan, the upfront premium is $5,250 and the annual premium at 0.55% is $1,650, or about $138 a month.
How long you pay MIP
For most FHA loans, the annual MIP lasts the entire loan term. The exception is borrowers who put down 10% or more, who pay it for 11 years.
That permanence is the key difference from conventional PMI, which cancels once you reach enough equity. To drop FHA insurance for good, many owners refinance into a conventional loan.
Good to know: The upfront MIP can be partly refunded if you refinance into a new FHA loan within three years. The refund shrinks each month, so the timing matters.
MIP vs. PMI
MIP applies to FHA loans, and PMI applies to conventional loans. The biggest practical gap is how each one ends.
- MIP: Usually lasts the life of the loan unless you put 10% down.
- PMI: Cancels automatically once the balance reaches 78% of the original value.
- Upfront cost: FHA charges a 1.75% upfront premium, while most PMI has no upfront fee.
- Qualifying: FHA accepts lower credit scores, so MIP often covers riskier borrowers.
How to reduce or remove FHA mortgage insurance
- Put down 10% or more: This cuts the annual MIP period to 11 years instead of the full term.
- Build equity: Extra principal payments raise your equity faster.
- Improve your credit: A stronger score opens the door to conventional refinancing.
- Refinance to conventional: Once you have about 20% equity, a conventional loan can drop insurance entirely.
- Compare lenders: Refinance costs and rates vary, so shop before committing.
The right move depends on how much equity you have and how long you plan to stay. For many owners, refinancing is the only way to end FHA insurance for good.
Related reading on home financing
- Private mortgage insurance is the conventional-loan version of mortgage insurance and can be cancelled.
- Conventional loan is the most common way borrowers refinance out of FHA insurance.
- FHA 203k covers an FHA program that also carries mortgage insurance premiums.
- Refinancing explains the process of replacing your current loan with a new one.
Frequently asked questions
How much is FHA mortgage insurance?
The upfront premium is 1.75% of the loan amount, and the annual premium is most often 0.55% per year. The annual rate can range from 0.15% to 0.75% depending on your loan size, term, and down payment.
Does FHA mortgage insurance ever go away?
For most FHA loans it lasts the full loan term. If you put down 10% or more, it ends after 11 years, and refinancing into a conventional loan can remove it sooner.
Is MIP the same as PMI?
No. MIP applies to FHA loans and often lasts the life of the loan, while PMI applies to conventional loans and cancels once you build enough equity.
Can I avoid paying MIP?
The only way to avoid MIP entirely is to choose a non-FHA loan, such as a conventional mortgage. Conventional loans with 20% down require no mortgage insurance at all.
Key takeaways
- MIP is the mortgage insurance FHA borrowers pay to protect the lender against default.
- The upfront premium is 1.75% of the loan, and the annual premium is most often 0.55%.
- For most FHA loans, MIP lasts the entire loan term.
- Putting 10% down shortens annual MIP to 11 years.
- Refinancing into a conventional loan is the common way to remove it for good.
Since FHA insurance can last the life of the loan, comparing your refinance options pays off. You can compare mortgage lenders to weigh FHA and conventional offers side by side, and SuperMoney’s mortgage industry study shows how much rates and fees vary between them.
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