FHA mortgage insurance premium (MIP): Costs and rules

FHA mortgage insurance premium (MIP) is required on every FHA loan.¹ You’ll pay two types of MIP: a 1.75% upfront MIP, and an annual MIP that ranges from 0.15% to 0.75% of your loan balance. How long you pay the annual MIP depends on your initial down payment. You pay it for 11 years with 10% down, or for the full loan term with less than 10% down.

Learn more about what MIP costs, how to calculate it, how long it lasts, and practical ways to reduce or remove it.

Key takeaways:

• The upfront MIP charge is 1.75% of your base loan amount, which you can pay in cash at closing or roll into your loan balance.
• Annual MIP ranges from 0.15% to 0.75%, depending on your loan term, amount, and down payment. The annual MIP is divided into 12 monthly installments and added to your mortgage payment.
• Your down payment determines payment duration. Putting down 10% or more limits annual MIP to 11 years. Putting down less than 10% requires MIP for the full life of the loan.

What is an FHA mortgage insurance premium (MIP)?

MIP is a kind of mortgage insurance that protects lenders by covering their losses when a borrower defaults on an FHA loan. This reduces the risk lenders take in offering FHA loans and makes them more likely to offer this type of mortgage.

FHA borrowers pay an upfront MIP when they close on their loan, and an annual MIP that is divided into monthly installments and added to their mortgage payment.

The amount borrowers pay for MIP depends on their loan amount and down payment.

Upfront MIP

FHA loan borrowers must pay an upfront MIP equal to 1.75% of their loan amount.

Your upfront MIP is due when you close on your FHA loan. You can pay it in cash as part of your closing costs or add the MIP amount to your loan principal.

Annual MIP

FHA loan borrowers also must pay an annual MIP, which is divided into monthly installments and added to the mortgage payment.

The annual MIP is calculated each year, using the expected average monthly loan balance for the year. That's calculated by adding the expected balance after each monthly payment and dividing by 12. That amount is multiplied by the MIP rate for your loan to get the total annual MIP, which is divided by 12 and added to each monthly payment.

As you pay down your mortgage balance, your annual MIP also will decrease.

How long do you have to pay for MIP?

How long you need to pay the annual MIP depends on your down payment.

If your down payment is 10% or more of the purchase price, the annual MIP requirement is removed after 11 years. If your down payment is less than 10%, you'll pay the annual MIP for the life of the loan or until your loan is paid off or refinanced.

How much is the annual MIP?

Your annual MIP rate is between 0.15% and 0.75% of your base loan balance, depending on three primary loan characteristics:

• Loan term. Shorter terms (15 years or less) feature lower MIP rates than 20- or 30-year terms. If you want more rate flexibility, an FHA adjustable-rate mortgage is another loan term option to consider.
• Down payment. Putting more money down reduces your annual MIP rate.
• Base loan amount. Base loan balances at or below standard national conforming limits pay lower rates than high-cost jumbo FHA balances.² This threshold follows the current FHA loan limits for most areas.

For most home buyers using a standard 30-year FHA loan with the minimum 3.5% down payment, the upfront MIP is 1.75% of the base loan amount, and the annual MIP rate is 0.55%. Check current FHA loan rates to see how your rate and MIP payment fit together.

Your loan term and down payment are the major factors determining your annual MIP. The FHA mortgage insurance premium chart below–our FHA MIP chart 2026–shows the various rates and durations for annual MIP payments.

FHA MIP vs. PMI

There's no PMI on FHA loans. Instead, FHA loans require MIP, while conventional loans require private mortgage insurance (PMI). Both protect the lender if you default. When it comes to FHA MIP vs PMI, the biggest difference is how you get rid of them. PMI can be canceled once you pay down your balance enough to have 20% equity in your home. Your lender will automatically cancel it when you pay down your balance enough to have 22% home equity. FHA MIP removal is based strictly on your original down payment. If you put down 10% or more, your MIP drops off after 11 years. If you put down less than 10%, you pay MIP for the entire life of the loan unless you refinance.

How to reduce or eliminate your FHA mortgage insurance

There’s no way to avoid paying MIP when you take out an FHA loan. However, FHA mortgage insurance removal is possible in a few ways–you can reduce what you pay or stop paying a few years into your loan. If you're dealing with PMI on a conventional loan instead, see how to get rid of PMI for a dedicated breakdown.

Save for a larger down payment

The easiest way to reduce your MIP costs is to make a larger down payment. If you’re able to bring at least 10% to the closing table, you’ll qualify for a lower annual MIP payment that you pay only for 11 years. You’ll also lower the amount that you borrow, which will reduce your up-front premium. Review the full FHA loan down payment requirements before deciding how much to put down.

Refinance to a conventional loan

Many homeowners refinance an FHA loan to a conventional loan when they reach 20% home equity and can avoid paying for PMI.³

To refinance from an FHA loan to a conventional loan, you must meet conventional loan requirements for debt-to-income ratio (DTI) and home equity.

Choose a different government-backed loan

To avoid MIP, you may want to consider other types of government home loans. Browse more FHA loan tips to help you manage costs beyond MIP.

USDA loan

USDA loans help low- to mid-income borrowers buy a home in specific rural areas with no down payment. Instead of mortgage insurance, you pay an up-front guarantee fee of 1%, compared with 1.75% for the up-front MIP, and an annual guarantee fee of 0.35%.

Rocket Mortgage currently doesn't offer USDA loans, but we want you to understand all your borrowing options.

VA loan

VA loans are available only to active-duty military personnel, veterans, and their qualifying spouses.⁴ VA loans require no down payment or monthly mortgage insurance, but borrowers must pay a one-time VA funding fee of between 1.25% and 3.3%, depending on their down payment amount and whether they've used their VA loan benefit previously.

How to calculate FHA MIP

If you want to know how to calculate FHA mortgage insurance premium (MIP), start with two separate costs: a one-time upfront fee and an ongoing monthly payment. See the example of an FHA MIP payment below, or use an FHA MIP calculator to get your exact numbers. For a full breakdown of FHA loan closing costs beyond MIP, see our complete guide.

• Upfront MIP calculation: Multiply your base loan amount by 1.75%. For example, on a $300,000 loan, your upfront MIP is $5,250 ($300,000 × 0.0175). You can pay this amount in cash at closing or finance it directly into your total loan balance. If you pay it in cash at closing, your loan amount stays $300,000, and your closing costs increase by $5,250. If you finance it, your new total loan amount becomes 305,250.* Once you know your MIP costs, use our how much house can I afford with an FHA loan calculator to see your full budget.
• Annual MIP calculation: Multiply your base loan amount by your annual MIP rate, then divide that number by 12 to find your monthly cost. Most standard 30-year FHA loan borrowers pay an annual rate of 0.55%. On a $300,000 loan, your annual MIP comes to $1,650 per year ($300,000 × 0.0055). Dividing that total by 12 gives you a monthly MIP payment of $137.50 added to your mortgage.* For extra confidence, run your own numbers through an FHA mortgage insurance premium calculator before you finalize your Loan Estimate. See our step-by-step FHA loan process guide for what comes after you calculate your costs.

FAQ

Here are answers to common questions about FHA MIP.

Does FHA MIP ever go away?

It depends on your initial down payment. If you put down 10% or more, the annual MIP automatically drops off after 11 years. If you put down less than 10%, the annual MIP remains for the full life of the loan unless you refinance into a conventional mortgage.

What is the FHA MIP rate for 2026?

Annual FHA MIP rates range from 0.15% to 0.75% across all loan types. Standard 30-year FHA loan borrowers with a minimum down payment pay an annual rate of 0.55%. Your exact rate depends on your loan term, base loan balance, and down payment.

How do I calculate my FHA MIP?

To find your upfront MIP, multiply your base loan balance by 1.75%. To find your monthly payment installment, multiply your base loan balance by your applicable annual MIP rate and divide the total by 12.

Can I avoid MIP on FHA?

You cannot avoid MIP on an FHA loan, as upfront and annual premiums are required for all borrowers. However, you can limit payment duration to 11 years by putting down at least 10%, refinance into a conventional loan once you reach 20% equity, or apply for a VA loan if you qualify.

Is FHA insurance tax-deductible?

Yes, qualified homeowners can deduct mortgage insurance premiums. Beginning in tax year 2026, Congress reinstated the federal mortgage insurance premium tax deduction. Check with a tax professional to see if you qualify based on your income and itemization status.

How does an FHA MIP refund work?

If you refinance your current FHA loan into a new FHA loan within 36 months of closing, you can receive a partial refund credit on your original upfront MIP. The credit starts at 80% in month one and decreases by 2 percentage points each month until expiring after year three. This refund is applied directly toward the upfront MIP on your new FHA mortgage rather than paid as cash. Compare current FHA refinance rates before you decide when to refinance.

The bottom line: MIP is required on FHA loans

FHA MIP requirements mean every FHA mortgage comes with an upfront MIP of 1.75% and ongoing annual MIP payments that vary by loan amount, down payment, and loan term. FHA loans remain one of the most accessible options for buyers with lower credit scores or smaller down payments.

While MIP adds to your monthly costs, it makes homeownership more accessible by encouraging lenders to offer FHA loans, which allow low down payments and lower credit scores. You can reduce MIP by making a minimum 10% down payment, eliminating it by refinancing to a conventional loan once you reach 20% equity, or avoiding it by exploring alternative loan programs. Weigh the full pros and cons of FHA loans before deciding if this program is right for you, and learn how to get preapproved for an FHA loan so you know your budget going in.

Ready to explore your FHA loan options and find the right mortgage for your situation? Explore your borrowing options today with Rocket Mortgage.

* Any figures, interest rates, loan examples, and market data referenced in this article are hypothetical or aggregated for educational purposes only. They are not intended to reflect current pricing, available terms, or personalized loan options for any consumer. This content does not constitute an advertisement of credit terms, a solicitation or offer to extend credit, or a rate quote under federal or state lending laws. Actual mortgage rates and terms are determined by individual financial qualifications, property characteristics, market conditions, and other factors, and are subject to change without notice. If you are seeking current, real-time mortgage rate information please refer to the official live rate information and product details published at RocketMortgage.com/mortgage-rates, where current pricing and various loan terms are made available.

¹ Rocket Mortgage is not acting on behalf of FHA or HUD.

² Rate pricing and closing costs dependent on loan qualification requirements and factors including but not limited to credit, income, assets, down payment, product selection and loan amount. This is not a commitment to lend.

³ Refinancing may increase finance charges over the life of the loan.

⁴ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency^.

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