# FHA Mortgage Insurance | How much is it? Can you cancel it?

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All Federal Housing Administration (FHA) loans require mortgage insurance. Homebuyers pay two types of mortgage insurance when purchasing a home using an FHA loan.

First, you pay an Upfront Mortgage Insurance Premium (UFMIP), a one-time fee paid at closing. Then, you pay a monthly Mortgage Insurance Premium (MIP), a recurring charge paid in monthly installments.

The cost of mortgage insurance depends on the loan amount, down payment, and loan term. In this article, I'll show you how much FHA mortgage insurance costs, how to calculate it, and when you can cancel it.

Feel free to use our FHA mortgage calculator to explore your options. It's easy to compare current rates, payments, and closing costs online, 24/7, so you can choose the right loan for the perfect home. Use the FHA Mortgage Calculator now.

## Why do you pay FHA mortgage insurance?

Mortgage insurance protects the lender against losses if you don't repay the loan. In return for paying mortgage insurance, the lender makes getting approved for a mortgage to buy a home easier.

With an FHA loan, you can finance the purchase of a single-family, condominium, townhome, or 2-to-4-unit property with a down payment of 3.5% of the purchase price. FHA loans typically have a lower down payment requirement than conventional ones, making it easier to afford a home.

##### Down payment requirements—FHA vs. Conventional

Down payment |
FHA loan |
Conventional loan |

1-Unit, House, or condo | 3.5% | 3% |

2-Unit, Duplex | 3.5% | 5% |

3-to-4 Units, Multifamily | 3.5% | 5% |

Also, you can get approved for an FHA loan when the lender would otherwise deny your application for a conventional loan. Because FHA loans are easier to qualify for than conventional loans, you may have a better chance of getting approved for an FHA loan if you have limited credit or financial resources.

Furthermore, you can have more debt and a lower credit score and enjoy cheaper payments than a conventional mortgage. FHA loans often have more lenient debt-to-income ratio requirements, which means you may qualify for an FHA loan even if you have a higher debt load. FHA loans also have more flexible credit score requirements, so you may get an FHA loan even if you have a lower credit score.

##### Maximum debt-to-income ratio and minimum credit score—FHA vs. Conventional

Overall, an FHA loan can be a good option for buying a home if you have a lower credit score, a smaller down payment, or want to take advantage of their more lenient qualifying criteria. However, I'll explain later that FHA loans also have certain limitations and requirements, such as lower loan limits and mortgage insurance premiums than conventional loans.

You can borrow more with a conventional loan than with an FHA loan. This is because the conventional conforming loan limits are about 35% higher than the FHA limits.

##### 2024 loan limits—FHA vs. Conventional

Property type |
FHA Chicago area |
Conventional loan limits |

House, condo, townhome | $498,257 | $766,550 |

2-flat, multi-unit | $637,950 | $981,500 |

3-flat, multi-unit | $771,125 | $1,186,350 |

4-flat, multi-unit | $958,350 | $1,474,400 |

## How much is the FHA Upfront Mortgage Insurance Premium (UFMIP)?

FHA charges an Upfront Mortgage Insurance Premium (UFMIP). It costs 1.75% of the loan amount. The lender calculates the UFMIP, collects it from you at closing, then forwards it to FHA.

The lender will provide you with a Loan Estimate that includes the amount of the UFMIP required for your loan. Meanwhile, you can use our closing cost calculator to estimate your closing costs, including the amount of the UFMIP.

Most homebuyers finance the UFMIP by adding it to the loan amount. For example, let's say your loan amount is $100,000. The UFMIP would be $1,750. So, your total loan amount after financing the UFMIP is $101,750.

**1.75% UFMIP rate**

= $1,750 UFMIP amount

The following example shows how to calculate the UFMIP and the total loan amount when buying a $400,000 home and making a minimum down payment of 3.5%.

First, multiply the purchase price of $400,000 by 3.5% to get the down payment of $14,000. Next, subtract the down payment from the purchase price to get the base loan amount of $386,000. Then, multiply the base loan amount by 1.75% to get the UFMIP of $6,755. Finally, add the base loan amount to the UFMIP to get the total loan amount of $392,755.

**× 1.75% UFMIP rate**

## How much is the FHA monthly Mortgage Insurance Premium (MIP)?

The monthly Mortgage Insurance Premium (MIP) for an FHA loan depends on the loan amount, term, and down payment.

You pay the MIP monthly as part of your regular mortgage payments to the lender. Your mortgage payments include the principal & interest for the loan, plus property taxes, homeowner's insurance, and mortgage insurance (PITI). Your lender forwards the mortgage insurance portion of your monthly payments to FHA.

The lender calculates FHA's monthly MIP as a percentage of the loan amount based on the following factors:

- Loan amount
- Term, 30 or 15 years
- Down payment

The loan term is the length of your mortgage, e.g., 30 or 15 years. The down payment is the amount you pay upfront to buy a house. It represents a percentage of the home's purchase price; the remainder is the loan amount you finance through the mortgage.

#### First, calculate the annual mortgage insurance premium by choosing a loan term and down payment. MIP is cheaper for loans with shorter terms and larger down payments.

If your loan term is more than 15 years and your down payment

- is less than 5%, the MIP is 0.55%
- is 5% or more, the MIP is 0.50%
If your loan term is 15 years or less, and your down payment

(Effective March 20, 2023)

- is less than 10%, the MIP is 0.40%
- is 10% or more, the MIP is 0.15%

##### FHA MIP for loans of $726,200 and less

Loan term |
Down payment percent |
MIP annual percent |

30 years or less |
Less than 5% |
0.55% |

5% or more | 0.50% | |

15 years or less | Less than 5% | 0.40% |

5% or more | 0.15% |

#### Then, to calculate the monthly MIP payment, multiply the base loan amount by the annual MIP percentage and divide by 12.

If you choose the 30-year fixed-rate FHA mortgage and make the minimum down payment of 3.5%, your MIP will be 0.55%.

For example, using the base loan amount of $100,000, multiply $100,000 by 0.55% to get an MIP of $550. Then, because the MIP is an annual premium, divide it by 12 to get the monthly installment amount of $45.83.

**× 0.55% MIP percentage**

= $550 Annual MIP

÷ 12 = $45.83, Monthly MIP payment

##### FHA MIP for loans greater than $726,200

Loan term |
Down payment percent |
MIP annual percent |

30 years or less | Less than 5% | 0.75% |

5% or more | 0.70% | |

15 years or less | Less than 10% | 0.65% |

10% to 22% |
0.40% | |

22% or more | 0.15% |

For example, let's say you buy a 3-unit, multi-family home in Chicago. You make a down payment of 3.5% of the purchase price, and your base loan amount is **$730,525**. In this case, you would pay the higher rate of 0.75% for the MIP because your down payment is less than 5% of the purchase price, and your loan amount is more than **$726,200**.

Then, to calculate the monthly MIP payment, multiply the base loan amount of $730,525 by 0.75% and divide by twelve to get the monthly MIP of $456.58.

## How much is FHA mortgage insurance? (Short answer)

Homebuyers pay two types of mortgage insurance when purchasing a home using an FHA loan: Upfront Mortgage Insurance Premium (UFMIP) and Monthly Mortgage Insurance Premium (MIP).

`1. `

UFMIP is a one-time fee added to your loan amount. To calculate, multiply the loan amount by the UFMIP rate of 1.75% to get the UFMIP dollar amount. Then, add the UFMIP to the base loan amount to get the total loan amount.

- For example, $100,000 Loan amount X 1.75% = $1,750 UFMIP + $100,000 Loan amount = $101,750 Total loan amount.

`2. `

MIP is a recurring charge paid to the lender in monthly installments as part of your regular mortgage payments. To calculate, multiply the base loan amount (not including the UFMIP) by the MIP rate of 0.55% for a 30-year fixed-rate mortgage when your down payment is less than 5%. Then divide by 12.

- For example, $100,000 Loan amount X 0.55% = $550 MIP ÷ 12 = $45.83 Monthly MIP.

Use the FHA Mortgage Calculator to calculate the UFMIP and MIP for your loan scenario.

- View closing costs based on current rates as you shop for a home.
- Get accurate information in real-time so you know what to expect.
- Then, feel confident about buying a home.

## Can I cancel FHA mortgage insurance?

UFMIP is not refundable, and MIP is required for the life of the loan unless you meet specific requirements.

UFMIP—You won't receive a refund for any portion of the UFMIP after paying off the FHA loan unless you refinance your current FHA loan to a new FHA loan. If you refinance FHA-to-FHA within three years, the lender handling your refinance will calculate the pro-rated UFMIP refund and subtract it from the UFMIP for the new loan. So, instead of receiving a check, you pay a lower UFMIP for the new loan.

MIP—If your down payment is less than 10% of the purchase price, you're stuck paying mortgage insurance for as long as you keep your FHA loan. The only way to get rid of the MIP is to pay off your FHA mortgage by selling the home or refinancing it with a conventional loan.

On the other hand, you may cancel FHA MIP after 11 years if your initial down payment when you bought the home was 10% or more and you made all your payments on time.

Feel free to ask questions or comment below. Or schedule time to talk with a home loan expert to get straight answers and find out how to start on your home loan.

## FHA mortgage insurance rules

FHA's official mortgage insurance premiums table

FHA's official monthly mortgage insurance premium calculation