How to Calculate FHA MIP: Upfront, Annual Rate, and Monthly Payment

To calculate FHA MIP, use two separate formulas. The upfront premium is your base loan amount multiplied by 1.75 percent. The monthly premium is your base loan amount multiplied by an annual rate between 0.15 percent and 0.75 percent, divided by 12. The annual rate depends on your loan term, loan-to-value (LTV) ratio, and whether your base loan is above or below $726,200.¹

What You Need Before You Start

Four numbers drive every FHA MIP calculation:

Your base loan amount — the amount financed before any insurance is added.
Your loan term — either longer than 15 years, or 15 years and under. Each has its own rate schedule.
Your LTV ratio at origination. If it is not on your loan documents, divide the loan amount by the adjusted value of the property, which under HUD Handbook 4000.1 is the lesser of the purchase price or the appraised value. With the minimum 3.5 percent down payment, your starting LTV is 96.5 percent.²
Whether your base loan is above or below $726,200. HUD uses that figure as the line between standard and high-balance FHA loans, and the annual rates are higher above it.¹

Calculating the Upfront Premium

The upfront mortgage insurance premium (UFMIP) is a one-time charge on nearly every FHA purchase loan. The rate is a flat 1.75 percent of the base loan amount. Credit score, down payment, and loan term do not change it.¹

The formula: Base loan amount × 0.0175 = UFMIP.

A $300,000 base loan produces $5,250. A $400,000 base loan produces $7,000. You can pay this in cash at closing or roll it into the loan balance. Financing the $5,250 on the $300,000 example would push the balance to $305,250, raising both the monthly payment and total interest. Most borrowers finance it.³

If you refinance or pay the loan off within three years, a partial UFMIP refund is possible. The refund starts at 80 percent in month one and drops by roughly two percentage points each month, reaching 10 percent at month 36. After that, no refund is available.

Finding Your Annual MIP Rate

The annual rate is where the tables come in. Locate the row that matches your loan term, base loan size, and LTV.¹

Loans Longer Than 15 Years

Base loan of $726,200 or less:

LTV of 90% or less: 50 basis points (0.50%), for 11 years.
LTV above 90% up to 95%: 50 basis points (0.50%), for the full term.
LTV above 95%: 55 basis points (0.55%), for the full term.

Base loan above $726,200:

LTV of 90% or less: 70 basis points (0.70%), for 11 years.
LTV above 90% up to 95%: 70 basis points (0.70%), for the full term.
LTV above 95%: 75 basis points (0.75%), for the full term.

A borrower putting 3.5 percent down on a standard-balance loan lands in the 55 basis point tier because the starting LTV is 96.5 percent. Ten percent down drops you to the 50 basis point tier and, because LTV is at or below 90 percent, cuts the payment duration to 11 years.

Loans of 15 Years or Less

Base loan of $726,200 or less:

LTV of 90% or less: 15 basis points (0.15%), for 11 years.
LTV above 90%: 40 basis points (0.40%), for the full term.

Base loan above $726,200:

LTV of 78% or less: 15 basis points (0.15%), for 11 years.
LTV above 78% up to 90%: 40 basis points (0.40%), for 11 years.
LTV above 90%: 65 basis points (0.65%), for the full term.

Calculating the Monthly Payment

Once you have the annual rate, two steps get you to a monthly figure:

Multiply the base loan amount by the annual rate as a decimal.
Divide by 12.

Example 1. Thirty-year loan, 3.5% down, $300,000 base loan. LTV is 96.5 percent, so the rate is 0.55 percent. $300,000 × 0.0055 = $1,650 per year, or $137.50 per month. Because the starting LTV exceeds 90 percent, this payment continues for the full loan term.

Example 2. Thirty-year loan, 10% down, $300,000 base loan. LTV is 90 percent, so the rate is 0.50 percent. $300,000 × 0.0050 = $1,500 per year, or $125.00 per month. This one ends after 11 years.

Example 3. Fifteen-year loan, 10% down, $250,000 base loan. LTV is 90 percent and the loan is below $726,200, so the rate is 0.15 percent. $250,000 × 0.0015 = $375 per year, or $31.25 per month for 11 years.

Your lender collects the monthly MIP with your regular mortgage payment and forwards it to the FHA.⁴

How Long You Keep Paying

The duration built into every rate row above comes from a single rule tied to your starting LTV:

Starting LTV of 90 percent or less (10 percent or more down): annual MIP ends after 11 years of payments, on both 15- and 30-year loans.
Starting LTV above 90 percent (less than 10 percent down): annual MIP runs for the full loan term. The only ways out are refinancing into a conventional loan or paying the mortgage off.

These rules apply to FHA loans with case numbers assigned on or after June 3, 2013. Loans older than that may have different cancellation terms; a servicer can confirm.⁵

The Common Case, Start to Finish

Pulling the numbers together for a 30-year FHA loan with 3.5 percent down on a $300,000 base loan:

Upfront MIP: $300,000 × 0.0175 = $5,250.
Annual rate: 0.55 percent.
Monthly MIP: $300,000 × 0.0055 ÷ 12 = $137.50.
Duration: the full loan term, because the starting LTV is above 90 percent.

In the first year, that borrower pays $5,250 upfront and $1,650 in annual premium, for $6,900 in mortgage insurance. Run the same math against your own base loan, term, and down payment before you make an offer so the true cost of the FHA option is on the table alongside anything else you are weighing.

1
HUD. Mortgagee Letter 2023-05 – Reduction of FHA Annual Mortgage Insurance Premium Rates
2
HUD. FHA Single Family Housing Policy Handbook
3
U.S. Department of Housing and Urban Development. What Is the FHA Mortgage Insurance Premium Structure for Forward Mortgage Loans
4
U.S. Department of Housing and Urban Development. Monthly (Periodic) Mortgage Insurance Premium Calculation
5
U.S. Department of Housing and Urban Development (HUD). Single Family Mortgage Insurance Premiums