🏠 What Is MIP? (Mortgage Insurance Premium)

🏠 What Is MIP? (Mortgage Insurance Premium)

If you’re looking at an FHA loan, you’ll likely come across the term MIP, or Mortgage Insurance Premium. It’s an important part of FHA loans, and understanding it can help you plan for your monthly mortgage costs.

🔍 What Is MIP?

MIP is a type of mortgage insurance required for FHA loans. It protects the lender in case you default on your loan. Unlike private mortgage insurance (PMI), which is for conventional loans, MIP is mandatory for all FHA borrowers.

💵 How Much Does It Cost?

There are two parts:

1. Upfront MIP – Usually 1.75% of your loan amount, paid at closing or rolled into your loan.
2. Annual MIP – Paid monthly as part of your mortgage payment. The amount depends on your loan size, term, and down payment.

🧾 How Long Do You Pay It?

• If your down payment is less than 10%, you’ll likely pay MIP for the life of the loan.
• If your down payment is 10% or more, MIP may drop off after 11 years.

✅ Can You Get Rid of MIP?

Not directly on an FHA loan—but you can refinance into a conventional loan once you’ve built enough equity and potentially eliminate mortgage insurance altogether.

Understanding MIP helps you budget wisely and plan for the future. FHA loans are a great option for many first-time buyers, but it’s important to know all the costs involved.

🔍 Ready to Learn More?

If you have questions about getting a mortgage or want to explore your options, reach out! I’m here to help guide you through every step of the process.