Quick answer
Mortgage insurance premium (MIP) is the mortgage insurance FHA borrowers pay: an upfront premium at closing plus an annual premium divided into the monthly payments. It funds FHA’s insurance, which protects the lender if the borrower defaults.
Key facts
11years
MIP lasts this long if you start at 90% LTV or less
HUD Mortgagee Letter 2023-05 · Feb 22, 2023
Example
With the minimum 3.5% down on a $361,000 home, the base loan is $348,365. The annual MIP on a 30-year loan at that loan-to-value is 0.55%, about $160 a month in the first year (it shrinks a little as the balance falls). Separately, the 1.75% upfront premium adds $6,096, usually financed into the loan.
How long it lasts
If your starting loan-to-value ratio is 90% or less, annual MIP ends after 11 years; with less than 10% down, it stays for the life of the loan. Putting down 5% or more drops the 30-year rate to 0.5%.
That’s the big difference from private mortgage insurance, which ends on its own when the balance reaches 78% of the original value. Many FHA borrowers drop MIP by refinancing into a conventional loan once they have enough equity. The FHA loans guide and FHA vs conventional compare the total cost.
Sources
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- CFPB — Minimum FHA down payment (Oct 28, 2026)
- HUD Mortgagee Letter 2023-05 — FHA annual MIP, 30-year loan, more than 95% LTV; FHA upfront mortgage insurance premium; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023)
- CFPB — PMI ends automatically at this share of original value (Oct 28, 2026)
- CFPB: What is mortgage insurance and how does it work?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.