Understand what it is, why it matters, and how to minimize it.

If you’re using an FHA loan — whether to buy a home or refinance — there’s one cost you’ll need to factor in:

👉 Mortgage insurance, also called MIP (Mortgage Insurance Premium).

While it’s a standard part of every FHA loan, many borrowers aren’t sure:

• What MIP really covers
• How long they’ll have to pay it
• And whether it can ever be removed

Here’s a clear breakdown of FHA mortgage insurance in 2025 — and how to manage it wisely.

---

✅ What Is FHA Mortgage Insurance?

FHA mortgage insurance protects the lender (not the borrower) if the loan defaults. Because FHA loans allow lower credit scores and smaller down payments, this insurance helps offset that increased risk.

There are two parts to FHA MIP:

1. Upfront Mortgage Insurance Premium (UFMIP)

• Charged once at closing
• Rate: 1.75% of your loan amount
• Can be paid upfront or rolled into the loan

2. Annual Mortgage Insurance (Paid Monthly)

• Ongoing monthly premium
• Rate: 0.15%–0.75%, depending on your loan term, amount, and down payment
• Added to your monthly mortgage payment

📘 MIP rates were reduced in 2023, making FHA more affordable — and those reductions continue to benefit new borrowers in 2025.

---

⏳ How Long Do You Have to Pay MIP?

It depends on your down payment and loan term:

Down Payment	MIP Duration
Less than 10%	Lifetime of the loan
10% or more	11 years, then drops off

So if you want to avoid paying MIP forever, you’ll need to:

• Put at least 10% down when buying, or
• Refinance into a conventional loan later (more on that below)

---

🧾 Can You Get Rid of FHA Mortgage Insurance?

Yes — but not automatically.

🔄 Option 1: Refinance into a Conventional Loan

Once you have 20% equity in your home and qualify for a conventional mortgage:

• You can refinance into a conventional loan with no PMI
• This is the most common way FHA borrowers remove MIP

Ideal if:

• Your credit score has improved
• Your home has appreciated in value
• You’re already planning to refinance for a lower rate or cash-out

📘 We’ll help you track when it makes sense to switch — and make your new loan as seamless as possible.

---

💡 What If You’re Refinancing With FHA?

If you’re doing a FHA streamline refinance, MIP still applies — but:

• You may get a partial refund of the upfront MIP
• Monthly MIP is often lower than your original loan
• The streamline process is fast and requires minimal paperwork

Great for borrowers who want lower payments without full requalification.

---

🧠 Can You Deduct FHA MIP on Taxes?

Sometimes — MIP has been tax-deductible in past years (subject to income limits), though it’s often extended year-to-year by Congress.

We recommend checking with your tax advisor during filing season.

---

🏢 Why PRMI?

At PRMI, we:

• Help you compare MIP costs vs. benefits
• Track when you’re eligible to refinance and remove MIP
• Offer both FHA and Conventional refinance options
• Make mortgage insurance clear and manageable from day one

---

👇 Want to Understand How FHA Mortgage Insurance Affects Your Payment?

We’ll break down your upfront and monthly MIP, and help you plan when and how to get rid of it.