The two FHA mortgage-insurance premiums
Every FHA loan carries mortgage insurance, and it comes in two parts that this calculator models separately. The upfront premium (UFMIP) is 1.75% of the base loan, almost always financed into the loan so it quietly grows your balance and the interest on it. Theannual premium — about 0.55% of the balance per year on a typical low-down-payment 30-year loan — is split into 12 and tacked onto every monthly payment.
The FHA gotcha
Conventional PMI cancels automatically at 78% loan-to-value. FHA annual MIP does not. Put under 10% down — the usual 3.5%-down case — and you pay annual MIP for the entire life of the loan, no matter how much equity you build. The only way out is to refinance into a conventional loan. With 10% or more down, MIP instead drops off after 11 years.
What makes this calculator different
- Both MIP premiums, modeled in full. We finance the 1.75% upfront MIP into the loan and add the annual MIP to the monthly payment — most calculators ignore one or the other.
- The life-of-loan warning, front and center. With under 10% down we show the total MIP you’ll pay over the loan’s life and flag that it won’t cancel on its own.
- See what 10% down saves you. Bump the down payment to 10% and watch MIP duration fall from the full term to 11 years.
- Full schedule and chart. An exportable amortization schedule and balance-over-time chart for the financed loan.
Frequently asked questions
What is FHA mortgage insurance (MIP)?+
FHA loans are insured by the Federal Housing Administration, which lets lenders accept down payments as low as 3.5% and more forgiving credit. In exchange, every FHA borrower pays mortgage insurance premiums (MIP) that protect the lender if you default. There are two pieces: a one-time upfront premium and an ongoing annual premium charged monthly. MIP is the FHA equivalent of the private mortgage insurance (PMI) on a conventional loan, but the rules for when it ends are very different.
What’s the difference between upfront MIP and annual MIP?+
Upfront MIP (UFMIP) is a one-time charge of 1.75% of the base loan amount. Almost everyone finances it into the loan rather than paying cash, so it raises your loan balance and the interest you pay on it. Annual MIP is a separate premium — roughly 0.55% of the loan balance per year on a typical low-down-payment 30-year loan — divided into 12 and added to every monthly payment. This calculator models both: it finances the 1.75% upfront premium into the loan and adds the annual premium to your monthly payment.
Why doesn’t FHA MIP cancel like conventional PMI? How do I get rid of it?+
This is the big FHA gotcha. Conventional PMI must be cancelled once you reach 78% loan-to-value. FHA annual MIP does not work that way. If your down payment is under 10% (the usual 3.5%-down case), annual MIP lasts the entire life of the loan — paying down your balance does not remove it. With 10% or more down, it ends after 11 years. For life-of-loan MIP, the only realistic way out is to refinance into a conventional loan once you have enough equity, at which point you can drop mortgage insurance entirely.
FHA vs conventional: which is cheaper once PMI and MIP are counted?+
It depends on your credit and down payment. FHA shines for buyers with lower credit scores or only 3.5% to put down, because it is easier to qualify for. But because MIP can last the life of the loan, FHA can cost more over time than a conventional loan whose PMI falls off at 78% LTV. If you have strong credit and can put 10–20% down, a conventional loan is often cheaper in the long run. Run both and compare the total mortgage-insurance cost, not just the rate.
What are the FHA minimum down payment and credit requirements?+
The FHA minimum down payment is 3.5% with a credit score of 580 or higher. Between 500 and 579 you generally need 10% down. Below 500 you typically cannot qualify. FHA also sets loan limits that vary by county, and the home must be your primary residence and meet basic property standards. This calculator defaults to the 3.5% minimum so you can see exactly what life-of-loan MIP costs at the lowest down payment.
Disclaimer: This calculator is for educational purposes only. FHA premiums, loan limits, and qualifying rules change over time and vary by loan amount, term, and down payment; annual MIP is technically recalculated each year on the average balance, which we simplify to a constant premium. It is not financial or lending advice.