FHA mortgage insurance has an upfront component and an annual component collected through monthly payments. Both affect the deal. A lower note rate doesn't automatically make an FHA mortgage cheaper than a conventional loan once insurance and financed charges are included.
The other important difference is duration. FHA MIP doesn't follow conventional PMI's normal borrower cancellation rules based on reaching 20% equity.
Two parts: upfront and monthly
Upfront premium: 1.75% of the loan amount, charged at closing. Almost everyone rolls it into the loan instead of paying cash.** Annual premium:** most 30 year FHA loans pay 0.55% of the loan amount per year, divided into your monthly payment. Putting more down lowers it slightly, and 15 year loans pay much less. HUD lowered the annual premium to its current level in 2023.
Estimate your FHA mortgage insurance
Estimate using HUD's current premium schedule for loans up to $726,200. Your lender confirms exact figures.
How long it lasts
This is the part that matters most. If you put down less than 10%, the annual premium lasts for the life of the loan. If you put down 10% or more, it ends after 11 years. Unlike conventional mortgage insurance, it doesn't drop off just because your home value rises.
How long FHA mortgage insurance lasts: less than 10% down means the life of the loan, 10% or more down means 11 years
Less than 10% down
Monthly premium for the life of the loan
10% or more down
11 years
No mortgage insurance
Refinance to conventional at about 20% equity
FHA years
Mortgage insurance gone
30 year FHA loan. Simplified for illustration.
How long FHA mortgage insurance lasts, and the usual way out.
How to get rid of it
For most FHA borrowers, the way out is refinancing into a conventional loan once you have enough equity, usually 20%, and your credit supports it. Rising home values and paying down your balance both help you get there. It's worth checking every year or so. See FHA refinancing.
Is it worth it?
Compare it directly with the conventional vs FHA calculator, and check whether HomeReady or Home Possible fits your income.
If FHA is what gets you into a home years sooner, the mortgage insurance is often a fair price for that head start, especially if you plan to refinance later. If your credit is strong and you have 5% or more down, compare conventional carefully, because its mortgage insurance is often cheaper and removable. And remember, every rate has a price. Compare total cost, not just the payment.
Buying with FHA, leaving it later
Andre bought a townhome in Orlando with 3.5% down and a 610 score. His FHA mortgage insurance was built into his payment for the life of the loan.
Three years later, his score was in the 700s and his home had gained value. He refinanced into a conventional loan with no mortgage insurance, and his monthly payment dropped even though rates were about the same.
Keep the base loan separate from the total debt
For a standard forward FHA mortgage subject to the regular schedule, upfront MIP is 1.75% of the base loan amount. When eligible and financed, it increases the debt rather than the cash needed at closing. Special refinance and other program categories can have different treatment.
Hypothetical example: a $400,000 base mortgage has $7,000 of upfront MIP at 1.75%. Financing it produces a $407,000 total mortgage. The premium didn't disappear. It became part of the balance on which you pay interest.
At an illustrative 6.25% over 30 years, principal and interest are about $2,506 on $407,000. They would be about $2,463 on $400,000 at the same rate. Financing the premium adds about $43 a month in this example.
This is separate from the monthly annual MIP collection.
Annual MIP is another recurring expense
The annual rate depends on the applicable premium schedule, including term, base amount and original LTV. Don't apply one widely advertised annual rate to every FHA loan.
For illustration, assume the $400,000 base loan fits the regular more than 15 year, greater than 95% LTV category carrying a 0.55% annual premium. Multiplying $400,000 by 0.55% and dividing by 12 gives about $183 a month as a rough opening planning amount.
HUD's actual periodic premium calculation uses the applicable amortization and premium method, so the lender's scheduled amount can differ from that simplified estimate. Ask for the actual disclosed premium.
The estimated payment now includes about $2,506 in principal and interest plus roughly $183 of MIP, before property taxes, homeowners insurance and any association charges. A comparison using only the $2,506 misses a real monthly obligation.
Original leverage helps determine duration
For standard forward loans with FHA case numbers assigned on or after June 3, 2013, the regular duration schedule generally works as follows. Older loans and special categories need their own review.
| Original LTV under the applicable schedule | ** Regular annual MIP duration** |
|---|---|
| At or below 90% | 11 years, or earlier payoff of the loan |
| Above 90% | Mortgage term, ending earlier if the loan is paid off |
The key is original leverage under the applicable rule. Paying principal down later or benefiting from appreciation doesn't automatically convert a full term MIP obligation into conventional cancellable PMI.
An FHA borrower should confirm the case and endorsement history, original LTV, term and actual premium schedule with the servicer before planning a removal date.
More down payment doesn't automatically remove FHA insurance
A buyer considering 10% down may change the duration under the applicable schedule, but still has an upfront premium and an annual premium for the required period. Compare the actual cash and insurance savings with a conventional alternative if eligible.
For a $420,000 purchase, moving from 3.5% to 10% down uses $27,300 more cash before other costs. That can be worthwhile for some borrowers. It should be evaluated against the resulting base balance, total financed debt, monthly premium, cash cushion and conventional pricing.
Don't use the future absence of insurance after 11 years as the only reason to stretch the down payment today. You must be able to carry the transaction and maintain adequate liquidity now.
Refinancing to conventional can remove one cost and add others
A conventional refinance can eliminate FHA MIP when the borrower and property qualify and the structure doesn't require conventional mortgage insurance. But the new rate, closing costs, balance and term determine whether the transaction is actually better.
Suppose a borrower currently pays $180 of monthly MIP. A proposed refinance removes it but increases principal and interest by $125. The net monthly improvement is about $55 before escrow changes. If true incremental costs are $5,000, simple payment recovery is about 91 months.
That is a hypothetical screening example. Balance differences and term reset still matter. The refinance calculator guide owns that deeper comparison.
FHA to FHA refinancing has a different purpose
A Streamline refinance can improve eligible FHA financing without automatically converting the loan into a conventional insurance structure. Its benefit test, premiums and any applicable upfront premium credit require their own calculation.
The Streamline comparison explains those eligibility mechanics. Don't assume that the word streamline means no insurance, no costs or guaranteed approval.
Review insurance as part of the complete offer
Ask the lender for the base amount, upfront premium, financed premium, total note amount, actual monthly MIP and expected duration. Compare them with a fully priced conventional option using the same purchase and a realistic holding period.
If you already have the FHA loan, get its actual insurance terms before shopping a refinance. The right question is how much the complete financing costs and whether changing it improves the household's position.
Common questions
Can I remove FHA mortgage insurance?
If you put 10% or more down, it ends after 11 years. Otherwise you'll need to refinance into a conventional loan to drop it.
Can I finance the upfront premium?
Yes. It's usually added to your loan amount.
Does FHA insurance cost more than PMI?
For lower credit scores, FHA can cost less. For higher scores, conventional PMI is often cheaper.
How much is FHA mortgage insurance in 2026?
1.75% upfront, usually financed, plus an annual premium of 0.55% for most 30 year loans, paid monthly.
Does FHA mortgage insurance ever go away?
With less than 10% down, it lasts the life of the loan. With 10% or more down, it ends after 11 years. Refinancing into conventional is the usual way out.
Is FHA mortgage insurance tax deductible?
Tax rules for mortgage insurance have changed over the years. Ask your tax advisor.
Can I get the upfront premium refunded?
If you refinance into another FHA loan within three years, part of the upfront premium can be credited toward the new one.