FHA mortgage insurance comes in two parts, both set by HUD, and every FHA loan has them. The upfront MIP is 1.75% of the base loan amount, usually financed into the loan. The annual MIP is charged monthly, and on most 30-year FHA loans in Central Texas it's 0.50% or 0.55% a year. How long you pay it depends on your down payment: with 10% or more down it ends after 11 years; with less than 10% down it lasts for the life of the loan, and the usual way out is refinancing into a loan without FHA insurance.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. FHA mortgage insurance is the part of an FHA loan buyers ask me to explain twice, usually once before they apply and again a few years later when they want it gone. Everything here comes from HUD's Single Family Housing Policy Handbook 4000.1 (last revised August 12, 2026) and the CFPB. My FHA loan requirements guide covers qualifying, and my FHA loan limits guide covers county limits; this one is about the insurance itself.
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Why FHA Loans Have Mortgage Insurance
FHA doesn't lend money. It insures loans that approved lenders make, and the premiums fund that insurance. The CFPB puts it plainly: mortgage insurance "protects the lender, not you," if you fall behind. It's the trade for FHA's lower down payment and more flexible credit rules.
Two things make FHA mortgage insurance different from conventional private mortgage insurance (PMI):
- Your credit score doesn't change the price. The CFPB notes FHA mortgage insurance "costs the same no matter your credit score," with only a slight increase for down payments under 5%.
- It doesn't cancel at 78% or 80%. Conventional PMI has federal cancellation rules. Current FHA loans follow HUD's MIP chart instead, covered below.
Upfront MIP: 1.75% of the Base Loan Amount
HUD's rules for the upfront premium (UFMIP):
- Amount: 175 basis points (1.75%) of the base loan amount, the loan before UFMIP is added.
- All or nothing: it must be entirely financed into the loan or paid entirely in cash at closing. If financed, the full amount goes in, except any amount under $1, and the total loan is rounded down to the nearest whole dollar.
- Doesn't count against the limit: HUD says the financed UFMIP isn't counted when checking the FHA loan limit or the maximum LTV. A buyer at the Bell or McLennan County one-unit limit of $541,287 can still finance UFMIP on top.
- Not refundable, except as a credit when you refinance into a new FHA loan within three years (see the refund table below).
Annual MIP Rates: HUD's Full Chart
The annual premium is quoted as a yearly rate and paid in monthly installments with your mortgage payment. HUD sets it by loan term, base loan amount, and loan-to-value (LTV). For a purchase, LTV uses the lesser of the price or the appraised value. These rates apply to FHA case numbers endorsed on or after March 20, 2023 (Handbook 4000.1, Appendix 1.0).
Loans Longer Than 15 Years (Most 30-Year Loans)
| Base Loan Amount | LTV | Annual MIP | How Long |
|---|---|---|---|
| $726,200 or less | 90% or less | 0.50% | 11 years |
| $726,200 or less | Over 90% up to 95% | 0.50% | Mortgage term |
| $726,200 or less | Over 95% | 0.55% | Mortgage term |
| Over $726,200 | 90% or less | 0.70% | 11 years |
| Over $726,200 | Over 90% up to 95% | 0.70% | Mortgage term |
| Over $726,200 | Over 95% | 0.75% | Mortgage term |
Loans of 15 Years or Less
| Base Loan Amount | LTV | Annual MIP | How Long |
|---|---|---|---|
| $726,200 or less | 90% or less | 0.15% | 11 years |
| $726,200 or less | Over 90% | 0.40% | Mortgage term |
| Over $726,200 | 78% or less | 0.15% | 11 years |
| Over $726,200 | Over 78% up to 90% | 0.40% | 11 years |
| Over $726,200 | Over 90% | 0.65% | Mortgage term |
What this means locally: the 2026 one-unit FHA limits are $541,287 in Bell and McLennan counties and $571,550 in Williamson County, so single-family FHA loans here fall in the "$726,200 or less" rows. The higher rows mostly come into play on two- to four-unit properties.
Where Your Down Payment Lands on the Chart
| Down Payment (30-Year Loan) | Base LTV | Annual MIP | Duration |
|---|---|---|---|
| 3.5% (FHA minimum with a 580+ score) | 96.5% | 0.55% | Life of loan |
| 5% | 95% | 0.50% | Life of loan |
| 10% | 90% | 0.50% | 11 years |
The jump from 5% to 10% down doesn't lower the rate on a 30-year loan, but it changes the duration from the full term to 11 years. That's the biggest lever in the chart.
What FHA Mortgage Insurance Costs in Dollars
Hypothetical example, $300,000 purchase, 30-year FHA loan, 3.5% down:
| Item | Math | Amount |
|---|---|---|
| Down payment | $300,000 x 3.5% | $10,500 |
| Base loan amount | $300,000 - $10,500 | $289,500 |
| Upfront MIP | $289,500 x 1.75% | $5,066.25 |
| Total loan with UFMIP financed | $289,500 + $5,066.25, rounded down | $294,566 |
| Annual MIP, first year (approximate) | about $289,500 x 0.55% | about $1,592 |
| Monthly MIP, first year (approximate) | $1,592 / 12 | about $133 |
Same home with 10% down: the base loan is $270,000, UFMIP is $4,725, and the annual MIP rate is 0.50%, roughly $1,350 in the first year, or about $112 a month. More important, it stops after 11 years instead of lasting the full 30.
Hypothetical, approximate figures for illustration only. Annual MIP is figured on the loan balance under HUD's rules, so the exact monthly amount on your Loan Estimate will differ slightly and will step down as the balance falls. These are not rate quotes.
On a monthly budget, MIP sits alongside principal, interest, taxes, and insurance. My how much house can I afford guide shows how all of it adds up for Central Texas payments.
How Long FHA MIP Lasts
Loans With Case Numbers on or After June 3, 2013
These follow the "How Long" column in HUD's chart:
- 11 years if your original LTV was 90% or less (10% or more down)
- The full mortgage term if your original LTV was over 90%
For a life-of-loan MIP, paying extra principal lowers your balance, and with it the dollar amount of MIP, but it doesn't end MIP early under the chart. The way out is a new loan.
Older FHA Loans (Closed 2001 or Later, Case Number Before June 3, 2013)
HUD's servicing rules still cancel MIP automatically on many of these older loans:
- Terms over 15 years: MIP cancels when the LTV reaches 78% of the lesser of the original sales price or appraised value, as long as you've paid MIP for at least five years.
- Terms of 15 years or less: MIP cancels at 78% regardless of how long you've paid, with some loans never charged annual MIP, depending on the case number date and original LTV.
- Borrower-requested cancellation: if extra principal payments got you to 78% ahead of schedule, you can ask your servicer to cancel, but not sooner than five years from origination (except 15-year loans), and only if you haven't been more than 30 days late in the past 12 months.
- Based on the original amortization schedule. HUD says it won't use a new appraised value to decide cancellation.
If you bought with FHA before mid-2013 and still pay MIP, it's worth asking your servicer where you stand.
Ways to Stop Paying FHA MIP
- Put 10% down at purchase. MIP ends after 11 years.
- Refinance into a conventional loan. Once you have enough equity and qualify, a conventional refinance replaces FHA MIP. If you have less than 20% equity, the new loan will likely carry PMI, but the CFPB explains you can request PMI cancellation at 80% of the original value, and it generally ends automatically at 78%. Weigh the refinance costs; my refinance page covers the options.
- Refinance into a VA loan if you're eligible. VA loans have no monthly mortgage insurance, though most borrowers pay a VA funding fee. See my VA funding fee guide.
- Sell or pay off the loan. MIP ends with the loan.
The UFMIP Refund When You Refinance FHA to FHA
If you refinance an FHA loan into another FHA loan within three years, HUD credits part of your original UFMIP toward the new loan's UFMIP. The credit depends on when you refinance:
| Year of Loan | Month 1 | Month 6 | Month 12 |
|---|---|---|---|
| Year 1 | 80% | 70% | 58% |
| Year 2 | 56% | 46% | 34% |
| Year 3 | 32% | 22% | 10% |
The credit drops 2 percentage points each month, from 80% in month 1 to 10% in month 36. After three years, there's no credit. Hypothetical: on the $5,066.25 UFMIP above, refinancing in the first month of year two would credit 56%, or about $2,837, against the new UFMIP.
One more note on refinances: for FHA Streamline or Simple Refinances of loans endorsed on or before May 31, 2009, HUD charges just 0.01% upfront and 0.55% annual MIP.
FHA MIP vs. Conventional PMI at a Glance
| FHA MIP | Conventional PMI | |
|---|---|---|
| Upfront charge | 1.75% of base loan | Usually none (most PMI is monthly, per CFPB) |
| Price varies by credit score | No | Yes, by down payment and credit score |
| Ends | 11 years (10%+ down) or loan term | Request at 80%, generally automatic at 78% |
| Paid to | FHA | Private mortgage insurer |
For a full side-by-side of the two loans, see FHA vs. conventional loans in Texas.
Frequently Asked Questions
How much is FHA mortgage insurance?
FHA charges an upfront premium of 1.75% of the base loan amount, which is usually financed into the loan, plus an annual premium paid monthly. On a 30-year loan of $726,200 or less, the annual premium is 0.50% with 5% or more down and 0.55% with less than 5% down, under HUD Handbook 4000.1 Appendix 1.0.
How long do you pay MIP on an FHA loan?
For FHA loans with case numbers assigned on or after June 3, 2013, annual MIP lasts 11 years if the original loan-to-value was 90% or less, meaning 10% or more down. If the original loan-to-value was above 90%, MIP lasts for the full mortgage term unless you refinance or pay off the loan.
Can I remove FHA mortgage insurance without refinancing?
Only in limited cases. Loans with 10% or more down drop MIP after 11 years, and many older loans with case numbers assigned before June 3, 2013 cancel MIP at 78% loan-to-value under HUD's servicing rules. For newer loans with less than 10% down, the usual way to stop paying MIP is to refinance into a conventional or VA loan.
Is the FHA upfront mortgage insurance premium refundable?
Not in cash. HUD says the upfront premium is refundable only as a credit when you refinance into a new FHA loan within three years. The credit starts at 80% in the first month and drops 2 percentage points each month to 10% in month 36, then ends.
Does my credit score change the cost of FHA mortgage insurance?
No. The CFPB notes FHA mortgage insurance costs the same no matter your credit score, with only a slight increase for down payments under 5%. Your credit score still affects whether you qualify and the interest rate a lender offers, but not the MIP rate.
Want to See Your Own MIP Numbers?
I'll show you the upfront and monthly MIP on your actual loan amount, compare 3.5%, 5%, and 10% down side by side, and line it up against a conventional option.
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Related Guides
- FHA Loan Requirements in Texas
- FHA Loan Limits in Texas
- FHA vs. Conventional Loans in Texas
- FHA Loans
- How Much House Can I Afford in Texas?
- Refinance Loans
Sources
- HUD: Single Family Housing Policy Handbook 4000.1 (last revised August 12, 2026): upfront and annual MIP standards, UFMIP refund schedule, MIP cancellation for older loans, and Appendix 1.0, Mortgage Insurance Premiums (03/20/2023)
- HUD: Mortgagee Letter 2023-05, Reduction of FHA Annual Mortgage Insurance Premium Rates (February 22, 2023)
- HUD: FHA mortgage limits lookup for Bell, McLennan, and Williamson counties (2026)
- CFPB: What is mortgage insurance and how does it work?, When can I remove PMI?, and FHA loans
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval and program guidelines, and approval, rates, and program availability are not guaranteed. This article is general information, not legal or tax advice. Not affiliated with or endorsed by HUD, the Federal Housing Administration, the CFPB, or any government agency. Contact HUD or your loan servicer directly for official FHA mortgage insurance terms on your loan.