Frequently asked questions
What is the FHA upfront MIP?
The upfront mortgage insurance premium (UFMIP) is a one-time fee of 1.75% of the base loan amount, rolled into your loan balance. On a $480,000 loan, that adds $8,400 to what you finance. You don't pay it out of pocket, but it increases your monthly payment slightly.
How long do I pay annual MIP?
If your down payment is less than 10%, you pay annual MIP for the life of the loan. If your down payment is 10% or more, MIP drops off after 11 years. This is different from conventional PMI, which drops at 78% LTV regardless of down payment.
Can I get rid of FHA MIP early?
The only way to remove FHA MIP before the required period is to refinance into a conventional loan once you have 20% equity. Many FHA borrowers do this after a few years of payments and home appreciation. Factor refinancing costs into this decision.
How does FHA compare to conventional with PMI?
FHA has lower down payment requirements (3.5% vs 3-5% conventional) and more flexible credit standards. However, FHA MIP often costs more than conventional PMI and lasts longer. For borrowers with good credit and 5%+ down, conventional may be cheaper long-term.
Why is my loan amount higher than the home price minus down payment?
The upfront MIP (1.75% of base loan) is rolled into your loan balance. So if you borrow $482,500 (home minus down payment), your actual loan is $482,500 + $8,444 = $490,944. Your monthly payment is calculated on this higher amount.
What down payment do I need for an FHA loan?
The minimum is 3.5% with a credit score of 580 or higher. With a score of 500-579, you need 10% down. The down payment can come from savings, gifts, grants, or employer assistance programs.