Reviewed by Jeff Shin, NMLS #1041652. Updated .
Also called: FHA MIP, UFMIP, annual MIP.
Upfront MIP
HUD sets the upfront mortgage insurance premium at 1.75% of the base loan amount on most FHA loans. Most borrowers finance it into the loan instead of paying it in cash at closing. The CFPB points out that financing it raises the loan amount and the total cost. See how the upfront MIP changes cash to close.
Annual MIP
The annual premium is a yearly rate split into monthly payments. HUD sets the rate by loan term, loan amount, and loan-to-value. The current schedule is in HUD Mortgagee Letter 2023-05, which lowered annual premiums for loans endorsed on or after March 20, 2023. The CFPB notes that FHA mortgage insurance costs the same regardless of credit score.
How long annual MIP lasts
Per HUD’s schedule, if your loan-to-value at closing is 90% or less, annual MIP lasts 11 years. Above 90%, it lasts for the full term of the loan. So with the minimum FHA down payment, the premium does not fall off on its own. The usual way out is to refinance later, often into a conventional loan once you have the equity.
MIP vs. PMI
PMI on a conventional loan can be canceled under the Homeowners Protection Act. FHA MIP follows HUD’s rules instead. Which costs less depends on your credit and down payment, so price both on the same house: FHA vs. conventional payment side by side.
Related terms
Related on BankPricer
Sources
Definitions on this page are summarized from the agencies that set the rules. Lenders can add stricter requirements. Checked October 7, 2026.
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