Key Takeaways
- FHA mortgage insurance includes 1.75% upfront (UFMIP) and 0.15%–0.55% annually (MIP)
- Most buyers pay $100–$200/month in FHA PMI
- It cannot be removed unless you put 10% down or refinance
- Credit score does not affect your FHA PMI rate
- FHA loans are ideal for low-down payment, lower-credit buyers
- You can use tools from First Class Mortgage to estimate PMI before applying
How Much Is FHA PMI? Everything You Need to Know About
FHA loans make homeownership possible for many first-time buyers and those with lower credit scores—but they come with a unique cost: FHA mortgage insurance, also known as FHA PMI (Private Mortgage Insurance).
While technically called MIP (Mortgage Insurance Premium) by the Federal Housing Administration, it functions much like PMI and is mandatory for nearly all FHA borrowers.
This guide explains exactly how much FHA PMI costs, how it’s calculated, and when (if ever) you can get rid of it.
What Is FHA PMI?
FHA PMI is a form of mortgage insurance required on all FHA loans. It protects the lender in case the borrower defaults. Unlike conventional loans, you must pay FHA mortgage insurance regardless of your down payment size.
There are two types of FHA mortgage insurance:
- Upfront Mortgage Insurance Premium (UFMIP)
- Annual Mortgage Insurance Premium (MIP)
FHA PMI vs Conventional PMI: What’s the Difference?
| Feature | FHA PMI (MIP) | Conventional PMI |
| Required for all borrowers | Yes | Only if <20% down |
| Upfront premium | 1.75% of loan amount | Typically none |
| Monthly premium | 0.15% – 0.75% annually | 0.3% – 1.5% based on risk |
| Can be canceled | Sometimes (see below) | Yes, usually when 20% equity |
| Backed by | U.S. Government (FHA) | Private mortgage insurers |
How Much Is FHA Upfront Mortgage Insurance (UFMIP)?
As of 2025, the FHA upfront mortgage insurance premium is:
- 1.75% of the loan amount
It can be paid at closing or rolled into the loan balance.
Example:
- Loan amount: $300,000
- 1.75% UFMIP = $5,250
If you roll it in, your total loan becomes $305,250.
How Much Is FHA Annual Mortgage Insurance (MIP)?
The annual MIP is paid monthly and is based on:
- Loan amount
- Loan-to-value (LTV) ratio
- Loan term
Here are common FHA MIP rates:
| Loan Term | Down Payment | Annual MIP Rate |
| 30 years | <5% down | 0.55% |
| 30 years | ≥5% down | 0.50% |
| 15 years | <10% down | 0.40% |
| 15 years | ≥10% down | 0.15% |
Example: Total FHA PMI on a $300,000 Loan
Let’s say you buy a $300,000 home with 3.5% down:
- Loan amount: $289,500
- Upfront MIP: 1.75% = $5,066 (rolled into loan)
- Annual MIP: 0.55% = $1,592/year or $132/month
Your total loan would be $294,566 including UFMIP.
Monthly FHA PMI = $132 (MIP only)
FHA MIP Cost by Loan Size (30-Year Loan, <5% Down)
| Loan Amount | Annual MIP (0.55%) | Monthly FHA PMI |
| $200,000 | $1,100 | ~$92 |
| $250,000 | $1,375 | ~$114 |
| $300,000 | $1,650 | ~$137 |
| $350,000 | $1,925 | ~$160 |
FHA PMI with 5% or Higher Down Payment
If you put 5% or more down, your MIP drops to 0.50% annually, lowering your monthly cost.
$300,000 loan @ 0.50% = $1,500/year = $125/month
The upfront MIP remains 1.75%, regardless of your down payment.
Can FHA PMI Be Removed?
That depends on your loan term and down payment:
- If your down payment is less than 10%, MIP is required for the life of the loan
- If you put down 10% or more, MIP ends after 11 years
To remove FHA PMI entirely, many homeowners refinance into a conventional loan once they reach 20% equity.
How Does FHA PMI Affect My Monthly Mortgage Payment?
FHA mortgage insurance adds $90–$200/month to most loans.
Because this amount is included in your monthly mortgage payment, it directly affects affordability and debt-to-income (DTI) ratios.
FHA PMI and Credit Score: Is It Affected?
No. FHA mortgage insurance is not affected by credit score.
This makes FHA loans attractive to buyers with:
- Credit scores between 580–699
- Limited down payment
- Recent credit challenges
By contrast, conventional PMI is more expensive for lower credit scores.
Is FHA Mortgage Insurance Worth It?
Yes—for many buyers. FHA PMI:
- Allows you to buy with as little as 3.5% down
- Is predictable and transparent
- Isn’t impacted by credit score
- Can be refinanced out later
However, if you qualify for a conventional loan with 5–10% down and a strong credit score, you might avoid long-term mortgage insurance altogether.
When Does FHA PMI Make the Most Sense?
- You’re a first-time buyer with limited savings
- You have credit below 700
- You qualify for an FHA loan but not for conventional
- You’re buying a lower-cost property and want affordable monthly payments
Tools to Help Estimate Your FHA PMI Costs
To estimate your monthly FHA PMI, use a Mortgage Payment Calculator with inputs for:
- Loan amount
- Interest rate
- Loan term
- Property tax
- Insurance
- FHA mortgage insurance (PMI)
FHA vs Conventional Loan: Which Has Cheaper PMI?
| Feature | FHA Loan | Conventional Loan |
| Upfront PMI | Yes (1.75%) | No |
| Monthly PMI | Yes (0.15% – 0.55%) | Yes (based on credit/down) |
| Can be canceled? | Only with 10%+ down | Yes at 20% equity |
| Credit Score Impact | No | Yes |
If your credit score is under 680, FHA is often more affordable.
If your score is 720+, conventional may save you money long-term.
Get a Custom FHA Loan Estimate From First Class Mortgage
Still unsure how FHA PMI affects your loan? Our team will calculate your monthly payment, explain your insurance costs, and help you compare FHA vs. conventional.
Call (763) 416-6789 or schedule a call to get prequalified today.
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