Mortgage Insurance Premium (MIP)

The FHA version of mortgage insurance.

How MIP works

FHA loans usually include two insurance charges: an upfront premium that is often rolled into the loan balance and an annual premium paid monthly as part of the mortgage payment.

Why it matters

MIP increases the true cost of an FHA loan. That is why FHA can be the right entry point for a buyer with lower credit, but not always the cheapest long-term financing strategy.

How borrowers usually remove it

With smaller down payments, the common exit is refinancing from FHA into a Conventional Loan once enough equity has been built to qualify without FHA insurance.

Related glossary terms

• Private Mortgage Insurance (PMI) - Conventional-loan mortgage insurance that is typically required below 20% down.
• Debt-to-Income Ratio (DTI) - A percentage showing how much of your income goes toward monthly debt obligations.

Related loan programs

• FHA Loans - FHA loans are insured by the Federal Housing Administration and let you buy with as little as 3.5% down and a 580 credit score, making them a top choice for first-time buyers and credit rebuilders.
• Refinance Loans - Refinancing replaces your current mortgage with a new one — to lower your rate, shorten your term, switch loan types, or pull cash out of your equity. The right refinance depends on your goal, not just current rates.

Learn more

• 🏠 What Is MIP? (Mortgage Insurance Premium)
• 🏡 What Is PMI (Private Mortgage Insurance)?