FHA Mortgage Insurance Premiums: UFMIP, Annual MIP, and Duration

An FHA mortgage insurance premium comes in two parts: an upfront charge of 1.75% of the base loan amount paid at closing, and an annual premium collected monthly that runs between 0.15% and 0.75% of the balance depending on your loan.¹ On a $350,000 loan with the minimum 3.5% down, that works out to $6,125 upfront plus roughly $160 a month, and the monthly charge sticks around for the life of the loan.

The Upfront Premium (UFMIP)

The upfront mortgage insurance premium is 1.75% of your base loan amount. It applies to every FHA purchase and most FHA refinances, regardless of down payment or credit score.¹ The math is simple:

$250,000 loan: $4,375
$350,000 loan: $6,125

Most borrowers roll the UFMIP into the loan rather than pay cash at closing. If you borrow $350,000 and finance the $6,125 premium, your starting balance becomes $356,125, and you pay interest on that extra amount for as long as you hold the mortgage. Over 30 years at a 7% rate, financing the UFMIP on a $350,000 loan adds roughly $8,600 in total interest. Paying it in cash at closing avoids that, but few buyers have the money left over after the down payment and other closing costs.

Your Loan Estimate and Closing Disclosure will show the UFMIP in the mortgage insurance section, whether financed or paid up front.

Annual MIP Rates

The annual MIP is added to your monthly mortgage payment alongside principal, interest, taxes, and homeowners insurance. Your rate depends on three things: your loan term, your loan-to-value ratio at origination, and whether the base loan amount sits above or below $726,200. These rates took effect in early 2023 and still apply in 2026.²

Loans With Terms Longer Than 15 Years

Most FHA borrowers land here, since 30-year mortgages dominate. For base loan amounts at or below $726,200:

LTV of 90% or less (10% or more down): 0.50% for 11 years
LTV above 90% up to 95% (5–10% down): 0.50% for the life of the loan
LTV above 95% (less than 5% down): 0.55% for the life of the loan

For base loan amounts above $726,200:

LTV of 90% or less: 0.70% for 11 years
LTV above 90% up to 95%: 0.70% for the life of the loan
LTV above 95%: 0.75% for the life of the loan

The $726,200 figure is a MIP rate tier, not the FHA loan limit itself. Loan limits for 2026 range from $541,287 in lower-cost areas up to $1,249,125 in high-cost areas, so buyers in expensive markets can easily borrow into the higher premium tier.³

Loans With Terms of 15 Years or Less

Short-term FHA loans carry much lower annual MIP. For base loan amounts at or below $726,200:

LTV of 90% or less: 0.15% for 11 years
LTV above 90%: 0.40% for the life of the loan

For base loan amounts above $726,200:

LTV of 78% or less: 0.15% for 11 years
LTV above 78% up to 90%: 0.40% for 11 years
LTV above 90%: 0.65% for the life of the loan

A 15-year loan with at least 10% down at 0.15% adds only about $37 a month on a $300,000 balance. That’s one of the cheapest forms of mortgage insurance you’ll see.

What You’ll Actually Pay Each Month

HUD calculates the annual MIP off the average outstanding balance for each 12-month period, then divides that into monthly installments collected with your payment.⁴ The monthly amount drops slightly each year as the balance shrinks.

A $350,000 base loan, 30-year term, 3.5% down (96.5% LTV, 0.55% tier):

Annual MIP: $350,000 × 0.55% = $1,925
Monthly MIP: about $160

Same loan with 5% down (95% LTV, 0.50% tier):

Annual MIP: $350,000 × 0.50% = $1,750
Monthly MIP: about $146

The extra 1.5% in down payment saves $14 a month. Modest on its own, but it compounds. The bigger prize is reaching 10% down, which changes the duration of the premium entirely.

How Long the Annual MIP Lasts

This is the detail that catches FHA borrowers off guard years later, so it’s worth being explicit.

If your starting LTV is 90% or less (you put down at least 10%), the annual MIP drops off after 11 years of payments. Your servicer must stop collecting it at that point and notify FHA and the loan’s investor.⁵ The 11-year rule applies to both 15- and 30-year loans, so a 30-year borrower with 10% down carries MIP through year 11 and then enjoys 19 years without it.

If your starting LTV is above 90% (less than 10% down), the annual MIP stays for the entire life of the loan. There is no automatic cancellation when you hit 20% or 22% equity. The only ways out are paying off the mortgage, selling the home, or refinancing into a different loan product.² Since 3.5% is the minimum FHA down payment, most FHA borrowers fall into this life-of-loan category.

Older FHA Loans

If your FHA case number was assigned before June 3, 2013, different rules apply. HUD automatically cancels the annual MIP on those loans when your LTV reaches 78% of the original property value, as long as you’ve met the minimum payment period tied to your original term.⁶ If you’re still holding one of those older loans, confirm the cancellation date with your servicer.

How FHA MIP Compares to Conventional PMI

The life-of-loan rule is the sharpest difference between FHA MIP and the private mortgage insurance charged on conventional loans. Under the Homeowners Protection Act, conventional PMI must be terminated automatically when the balance is scheduled to hit 78% of the original property value, and you can request cancellation at 80% LTV if your payment history is good and no other liens are on the property.⁷

FHA has no equivalent for borrowers who started below 10% down. Even if your home doubles in value, the MIP keeps coming. Many FHA borrowers eventually refinance into a conventional loan once they have 20% equity and stronger credit, which eliminates mortgage insurance if the new LTV is 80% or lower.

FHA isn’t automatically the worse deal at purchase, though. Credit requirements are more lenient, the down payment floor is lower, and MIP rates of 0.50% to 0.55% can beat PMI quotes for borrowers with credit scores in the low-to-mid 600s, where private insurers price aggressively.

Refinancing and the UFMIP Refund

Refinance from one FHA loan into another within three years and you get a partial credit toward the new UFMIP. It’s not a cash refund; the credit reduces the new premium you owe. The credit starts at 80% of the original UFMIP in month one and drops by roughly two percentage points each month, reaching 10% at month 36. After that, no credit is available.

This matters most on FHA Streamline Refinances, where borrowers roll from one FHA loan to another to catch a lower rate. For loans originally endorsed on or before May 31, 2009, the streamline UFMIP is just 0.01% of the loan amount, essentially waived to encourage those borrowers to update their terms.⁸

If the loan is paid off in full before maturity or the insurance is terminated by voluntary agreement, the Commissioner may refund unearned premium charges under the governing regulation.⁹ In practice that comes up when you sell or pay off early in the first few years.

Ways to Reduce What You Pay

Down payment is the strongest lever. Getting to 10% turns MIP from a permanent charge into one that ends after 11 years. On a $300,000, 30-year loan, ending MIP after year 11 at 0.50% saves roughly $24,000 compared with paying 0.55% for the full 30 years. Bridging the gap from 3.5% to 10% down is worth serious effort if it’s within reach.

Already have a life-of-loan FHA MIP? Watch your equity. Once you hit around 20% and your credit qualifies you for competitive conventional pricing, refinancing usually pays off. Run the math against closing costs: saving $150 a month with a $4,000 refinance breaks even in about 27 months.

Between the 15- and 30-year FHA options, the MIP gap is large. A 15-year loan with 10% down runs 0.15% for 11 years, versus 0.50% on a 30-year loan with the same down payment.² The higher principal payment on a 15-year loan isn’t realistic for every budget, but when it is, the MIP savings sit on top of the interest savings.

1
U.S. Department of Housing and Urban Development. Mortgagee Letter 2015-01 – Appendix 1.0 Mortgage Insurance Premiums
2
U.S. Department of Housing and Urban Development. Mortgagee Letter 2023-05 – Reduction of FHA Annual Mortgage Insurance Premium Rates
3
U.S. Department of Housing and Urban Development. Mortgagee Letter 2025-23 – 2026 Nationwide Forward Mortgage Loan Limits
4
U.S. Department of Housing and Urban Development. Monthly Periodic Mortgage Insurance Premium Calculation
5
U.S. Department of Housing and Urban Development. FHA Mortgage Insurance Premiums
6
U.S. Department of Housing and Urban Development. How Long Is MIP Collected for a Loan With a Case Number Assigned Prior to June 3, 2013
7
Federal Deposit Insurance Corporation. V-5 Homeowners Protection Act
8
Federal Deposit Insurance Corporation. Streamline Refinance
9
eCFR. 24 CFR 203.284 – Termination of Insurance Contract