What Is MIP (FHA Mortgage Insurance Premium)?

Short answer

MIP is the mortgage insurance every FHA loan carries, in two parts: an upfront premium of 1.75% of the base loan amount, usually financed into the loan, and an annual premium of 0.50% to 0.75% on 30-year loans depending on loan size and LTV (HUD Mortgagee Letter 2023-05, as of October 2026). Unlike PMI, the annual MIP lasts the life of the loan when you put less than 10% down.

Definition

The FHA mortgage insurance premium (MIP) funds the insurance that lets FHA lenders accept 3.5% down payments and lower credit scores. It has an upfront piece (UFMIP) and a monthly piece that is part of your payment.

Worked example

FHA purchase of a $400,000 condo in Hialeah Gardens with 3.5% down ($14,000). Base loan: $386,000. Upfront MIP: $386,000 x 0.0175 = $6,755, financed, so the total loan is $392,755. Annual MIP for a base loan up to $726,200 at LTV above 95% is 0.55%: $386,000 x 0.0055 = $2,123 a year, or about $177 a month, for the life of the loan. With 10% down instead ($40,000, base loan $360,000, LTV 90%), the annual rate is 0.50% and MIP ends after 11 years.

Current FHA MIP schedule (30-year loans)

Per HUD Mortgagee Letter 2023-05, effective for case numbers endorsed on or after March 20, 2023 (as of October 2026):

• Upfront MIP: 1.75% of the base loan amount.
• Base loan up to $726,200: 0.50% annual at LTV 95% or less; 0.55% above 95%.
• Base loan above $726,200: 0.70% at LTV 95% or less; 0.75% above 95%.
• Duration: 11 years if LTV is 90% or less; life of the loan if above 90%.

How to get rid of MIP

If you put less than 10% down, the only way out is to refinance into a non-FHA loan, typically a conventional loan once you have 20% equity. An FHA streamline refinance lowers your rate but keeps MIP. Part of the upfront MIP may be refunded if you streamline within three years.

In South Florida

FHA is popular in Miami-Dade for first-time buyers with limited savings, but the condo must be on HUD's approved list or qualify for single-unit approval, and many South Florida buildings do not. The monthly MIP also stacks on top of HOA dues and high insurance, which hits DTI. Many Miami FHA borrowers refinance into a conventional loan once they reach 20% equity to drop the MIP; appreciation here often makes that possible sooner than expected.