Definition
MIP is FHA's mortgage insurance—required upfront (1.75% financed into the loan) plus annual premiums (0.55-1.0%). It's harder to remove than PMI and may last the loan's life if your down payment is below 10%.
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FHA upfront MIP is typically 1.75% of the loan amount and is financed into the loan. Annual MIP ranges from 0.55% to 1.0% depending on LTV and loan term. MIP is more difficult to remove than PMI and may last the life of the loan if down payment is below 10%.
Pro Tip
Compare total costs of FHA loans (with MIP) versus conventional loans (with PMI) to determine the best option for your situation.
Example
A $300,000 FHA loan with a 3.5% down payment ($10,500) includes $5,250 upfront MIP (1.75%) plus annual MIP of approximately $2,250.