Mortgage Insurance Premium (MIP)
The insurance premium paid on FHA loans, structured as both an upfront charge and an ongoing annual premium.
MIP is the FHA-specific equivalent of mortgage insurance. Every FHA borrower pays an upfront mortgage insurance premium (UFMIP), typically 1.75% of the loan amount, which can be financed into the loan rather than paid in cash at closing.
There's also an annual MIP charged monthly with your payment. The rate depends on loan term, LTV, and loan amount. On most modern 30-year FHA loans with less than 10% down, annual MIP lasts the life of the loan and can only be removed by refinancing out of FHA into a conventional loan once equity supports it.
Compared to conventional PMI, FHA MIP doesn't credit-tier, it's the same rate regardless of credit score. That makes FHA structurally attractive for lower-score borrowers and structurally worse for higher-score borrowers who would get cheaper conventional pricing.
Related terms
Other terms you'll see alongside Mortgage Insurance Premium
An insurance policy that protects the lender if a borrower defaults on a conventional loan with less than 20% down.
A government-insured mortgage program designed to help buyers with lower credit scores or smaller down payments qualify.
Replacing an existing mortgage with a new one, typically to lower the rate, change the term, or extract equity.
The loan amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower).
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