How to Calculate FHA MIP: Upfront, Monthly, and Total Cost

To calculate FHA MIP, you need two formulas. The upfront mortgage insurance premium is your base loan amount times 1.75%, paid once at closing. The monthly premium is your base loan amount times the annual MIP rate that applies to your loan, divided by 12. The only real work is finding which annual rate bracket you fall into, and that comes down to your loan term, your loan-to-value ratio, and whether your base loan is above or below $726,200.

The Four Inputs You Need

Every MIP calculation uses the same four figures, all of which appear on the Loan Estimate your lender must provide within three business days of receiving your application:

Base loan amount: the purchase price minus your down payment. A $300,000 home with the FHA minimum 3.5% down ($10,500) produces a base loan of $289,500.
Loan-to-value ratio: the base loan divided by the appraised value or purchase price, whichever is lower. That $289,500 loan on a $300,000 home is 96.5% LTV.
Loan term: 15 years or less, or longer than 15 years. Each uses a different rate table.
Whether the base loan exceeds $726,200. Loans above that threshold carry higher annual MIP rates.

Upfront MIP: One Formula, One Payment

The upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount for virtually all FHA purchase and refinance transactions.¹

Base Loan Amount × 0.0175 = UFMIP

On the $289,500 loan: $289,500 × 0.0175 = $5,066.25.

You can pay this in cash at closing or finance it into the mortgage balance. When you finance it, HUD allows the total mortgage to exceed the FHA loan limit by the financed amount, and the total must be rounded down to a whole dollar.²

Annual MIP Rate Tables

The annual rate depends on your term, LTV at origination, and whether the base loan exceeds $726,200. These rates took effect for FHA case numbers assigned on or after March 20, 2023.³

Terms Longer Than 15 Years

This is the standard 30-year FHA mortgage. For base loan amounts of $726,200 or less:

LTV of 90% or below: 0.50% annually, paid for 11 years
LTV above 90% up to 95%: 0.50% annually, paid for the full loan term
LTV above 95%: 0.55% annually, paid for the full loan term

For base loan amounts above $726,200:

LTV of 90% or below: 0.70% annually, paid for 11 years
LTV above 90% up to 95%: 0.70% annually, paid for the full loan term
LTV above 95%: 0.75% annually, paid for the full loan term

The FHA minimum down payment is 3.5%, which puts most FHA borrowers in the “above 95%” LTV row.⁴ For a typical borrower with a base loan at or below $726,200, that means 0.55% for the entire 30 years.

Terms of 15 Years or Less

For base loan amounts of $726,200 or less:

LTV of 90% or below: 0.15% annually, paid for 11 years
LTV above 90%: 0.40% annually, paid for the full loan term

For base loan amounts above $726,200:

LTV of 78% or below: 0.15% annually, paid for 11 years
LTV above 78% up to 90%: 0.40% annually, paid for 11 years
LTV above 90%: 0.65% annually, paid for the full loan term

The $726,200 threshold in each table matches the national conforming loan limit at the time HUD issued the current rate schedule.³

Monthly MIP: The Calculation

Once you have the annual rate, the monthly figure is one line of math:

(Base Loan Amount × Annual MIP Rate) ÷ 12 = Monthly MIP

For the $289,500 loan at 96.5% LTV on a 30-year term, the rate is 0.55%:

$289,500 × 0.0055 = $1,592.25 per year
$1,592.25 ÷ 12 = $132.69 per month

That $132.69 rides along with principal, interest, property taxes, and homeowners insurance in your monthly payment. Your servicer collects it and forwards the MIP portion to FHA.

The same borrower on a 15-year term with 10% down (90% LTV) would use the 0.15% rate:

$270,000 × 0.0015 = $405.00 per year
$405.00 ÷ 12 = $33.75 per month

Nearly $1,200 a year in MIP savings, on top of the interest savings from the shorter term. Worth running the numbers both ways before you lock in a structure.

How Long You Keep Paying

The duration piece is where FHA loans catch people off guard. For loans with case numbers assigned on or after June 3, 2013:

If your LTV at origination was 90% or below (10% or more down), annual MIP drops off after 11 years of payments.³
If your LTV at origination was above 90% (less than 10% down), annual MIP stays for the entire life of the loan.⁵

Put 3.5% down and you pay MIP for all 30 years unless you do something about it. FHA annual MIP on a low-down-payment loan does not cancel automatically at 78% LTV the way conventional mortgage insurance does. The only ways out are paying off the loan or refinancing into a conventional mortgage once you have enough equity.

Total MIP Cost Over the Life of the Loan

Combining both formulas gives you a rough lifetime figure. On the $289,500 loan at 3.5% down on a 30-year term:

UFMIP: $5,066.25 at closing
Annual MIP: $1,592.25 per year, or $132.69 per month
Held the full 30 years: $5,066.25 + (30 × $1,592.25) = roughly $52,834

That total is an overestimate, because the annual MIP is recalculated each year against the declining balance. The $132.69 figure is close to accurate in the early years and shrinks as principal comes down. The lifetime cost is still large enough that many FHA borrowers refinance to a conventional loan as soon as their equity and credit support it.

UFMIP Refunds If You Pay Off or Refinance Early

If you pay off your FHA loan or refinance it, you may be owed a partial refund of the upfront premium. Federal regulation requires HUD to refund a portion of the unearned UFMIP when the insurance contract ends through prepayment, conveyance, or voluntary agreement between borrower and lender.⁶

HUD sets the refund percentage by the year your mortgage was endorsed for insurance. The refund shrinks the longer you hold the loan and eventually reaches zero. If you are considering an early payoff or refinance, ask your lender or check HUD’s schedule for the percentage tied to your endorsement year before you close on the new loan.

1
Department of Housing and Urban Development. Appendix 1.0 – Mortgage Insurance Premiums
2
Department of Housing and Urban Development. Chapter 7 – Mortgage Insurance Premiums
3
Department of Housing and Urban Development. Mortgagee Letter 2023-05
4
Department of Housing and Urban Development. What Is the Minimum Down Payment Requirement for FHA
5
Department of Housing and Urban Development. Mortgagee Letter 2013-04
6
eCFR. 24 CFR Part 203 – Single Family Mortgage Insurance