FHA Mortgage Insurance Premium (MIP) Calculator
MIP Calculation Results
Upfront Mortgage Insurance Premium (UFMIP): $0.00
Annual MIP Rate: 0.00%
Monthly MIP Payment: $0.00
Loan-to-Value (LTV): 0.00%
MIP Cancellation Eligibility: N/A
Total Estimated MIP Paid: $0.00
Disclaimer: This calculator provides estimates based on current FHA MIP rules (as of early 2024). FHA MIP rates and rules can change. This is for informational purposes only and not a guarantee of actual costs. Consult with an FHA-approved lender for precise figures.
Understanding FHA Mortgage Insurance Premium (MIP)
When you secure a loan backed by the Federal Housing Administration (FHA), you'll encounter a mandatory cost known as Mortgage Insurance Premium (MIP). Unlike conventional loans where Private Mortgage Insurance (PMI) can often be cancelled once you reach a certain equity threshold, FHA MIP has its own unique rules and duration.
What is FHA MIP?
FHA MIP is an insurance policy that protects the lender against losses if a borrower defaults on their mortgage. It's a requirement for all FHA loans, regardless of the down payment amount. This insurance is what allows FHA-approved lenders to offer more flexible qualification criteria, such as lower credit score requirements and smaller down payments, making homeownership accessible to a broader range of buyers.
Components of FHA MIP
FHA MIP consists of two main parts:
- Upfront Mortgage Insurance Premium (UFMIP): This is a one-time premium paid at closing. As of early 2024, the UFMIP is typically 1.75% of the base loan amount. While it's due at closing, most borrowers choose to finance this amount into their loan, meaning it's added to the principal balance and paid over the life of the loan.
- Annual Mortgage Insurance Premium (Annual MIP): This is an ongoing premium paid monthly as part of your mortgage payment. The annual MIP rate varies based on several factors, including your loan term (15 or 30 years), the original loan amount, and your loan-to-value (LTV) ratio at the time of origination. The annual MIP is calculated on the outstanding principal balance of your loan each year.
How Annual MIP Rates Are Determined
The FHA sets specific rates for the annual MIP. These rates are subject to change, but generally follow a structure based on your loan's characteristics:
- Loan Term: 30-year loans typically have higher annual MIP rates than 15-year loans.
- Loan-to-Value (LTV): This is the ratio of your loan amount to the home's appraised value. A higher LTV (meaning a smaller down payment) generally results in a higher annual MIP rate.
- Loan Amount: For very large loan amounts (above certain FHA limits), the rates might be slightly different, but for most standard FHA loans, the LTV and term are the primary drivers.
For example, for a 30-year FHA loan:
- If your LTV is greater than 95% (meaning you put less than 5% down), the annual MIP rate is often 0.55%.
- If your LTV is 95% or less (meaning you put 5% or more down), the annual MIP rate is often 0.50%.
For a 15-year FHA loan:
- If your LTV is greater than 90%, the annual MIP rate is often 0.45%.
- If your LTV is 90% or less, the annual MIP rate is often 0.40%.
MIP Cancellation Rules
One of the most significant differences between FHA MIP and conventional PMI is the cancellation policy. For FHA loans, whether or not you can cancel your annual MIP depends on your original LTV:
- If your original LTV was greater than 90% (e.g., you made a down payment of less than 10%): The annual MIP is typically required for the entire life of the loan, or until you refinance into a non-FHA loan.
- If your original LTV was 90% or less (e.g., you made a down payment of 10% or more): The annual MIP can be cancelled after 11 years.
The UFMIP, however, is never cancelled once paid or financed; it's a one-time charge.
How to Use the FHA MIP Calculator
Our FHA MIP Calculator helps you estimate these costs. Simply input:
- Original FHA Loan Amount: The total amount you are borrowing.
- Home Purchase Price: The price you are paying for the home. This helps determine your LTV.
- Loan Term (Years): Select whether your loan is for 15 or 30 years.
The calculator will then provide you with an estimate of your Upfront MIP, your Annual MIP rate, your monthly MIP payment, your LTV, and crucial information regarding MIP cancellation eligibility and the total estimated MIP paid over the relevant period.
Example Calculation:
Let's say you're buying a home for $310,000 with an FHA loan of $300,000 (meaning a $10,000 down payment, or about 3.2%). You choose a 30-year loan term.
- Original FHA Loan Amount: $300,000
- Home Purchase Price: $310,000
- Loan Term: 30 Years
Based on these inputs, the calculator would determine:
- LTV: ($300,000 / $310,000) * 100 = 96.77%
- Upfront MIP (UFMIP): 1.75% of $300,000 = $5,250
- Annual MIP Rate: Since LTV > 95% for a 30-year loan, the rate is 0.55%.
- Monthly MIP Payment: (0.55% * $300,000) / 12 = $137.50
- MIP Cancellation: Because your original LTV was greater than 90%, the MIP is for the life of the loan.
- Total Estimated MIP Paid (over 30 years): $137.50/month * 12 months/year * 30 years = $49,500 (plus the UFMIP).
Understanding FHA MIP is essential for budgeting and making informed decisions about your mortgage. Use this calculator as a helpful tool, but always confirm details with an FHA-approved lender.