How to remove FHA mortgage insurance
FHA mortgage insurance doesn't follow the PMI rules most articles describe. For most FHA loans made today it lasts either 11 years or the whole loan, and paying extra doesn't shorten it. Here is how to tell which rule applies to you, and how a refinance can end it sooner.
Which rule applies to your loan
FHA loans carry two premiums: an upfront premium of 1.75% of the loan, usually added to the balance, and an annual premium paid monthly. How long the annual premium lasts depends on when your FHA case number was assigned, which is on your closing documents or available from your servicer.
| Your loan | Down payment | Annual MIP ends |
|---|---|---|
| Case number on or after June 3, 2013 | 10% or more (loan-to-value 90% or less) | After 11 years |
| Case number on or after June 3, 2013 | Less than 10% | End of the loan term (up to 30 years) |
| Closed on or after Jan 1, 2001, case number before June 3, 2013 | Any | At 78% of the original value on the original schedule; for terms over 15 years, only after at least 5 years of premiums |
Sources: HUD Mortgagee Letter 2013-04 and 24 CFR 203.284. Loans closed before 2001 follow older rules; ask your servicer.
Why extra payments don't help (on newer loans)
With PMI on a conventional loan, paying extra gets you to the 80% cancellation point sooner. FHA works differently. For loans with case numbers from June 3, 2013, the premium ends on a fixed timetable, 11 years or the loan term, not at a balance. And HUD calculates the premium each year from the average balance on youroriginal amortization schedule, so prepaying doesn't make it smaller either.
Paying extra still saves interest at your mortgage rate. It just won't touch the MIP line. What it can do is bring forward the day a conventional refinance works, below.
What FHA insurance costs today
HUD cut annual premiums for loans endorsed on or after March 20, 2023 (Mortgagee Letter 2023-05). For loan amounts up to $726,200:
| Loan term | Down payment | Annual premium | Lasts |
|---|---|---|---|
| Over 15 years | Less than 5% | 0.55% | Loan term |
| Over 15 years | 5% to under 10% | 0.50% | Loan term |
| Over 15 years | 10% or more | 0.50% | 11 years |
| 15 years or less | Less than 10% | 0.40% | Loan term |
| 15 years or less | 10% or more | 0.15% | 11 years |
Loans above $726,200 pay up to 0.25 points more. The premium is a yearly percentage, charged monthly and recalculated once a year, so it falls a little each year.
A worked example
Buy a $350,000 home with 3.5% ($12,250) down at 6.25% for 30 years. The base loan is $337,750; the $5,911 upfront premium is added, for a $343,661 loan and a principal and interest payment of $2,115.98. Because the down payment is under 5%, the annual premium is 0.55% for the life of the loan:
- About $153.98 a month in year one, falling to about $132.14 by year ten.
- About $36,159 over 30 years if you keep the loan.
Now the way out. With no change in the home's value, the balance reaches 80% of $350,000, which is $280,000, in April 2038, after 11 yrs 4 mo. By then you'd have paid about $19,324 in MIP. Refinancing into a conventional loan at that point avoids the remaining $16,836, less the cost of the refinance.
Pay $300 extra a month from the start and you reach 80% in October 2033, after 6 yrs 10 mo: 4 yrs 6 mo sooner, and about $7,195 less MIP paid along the way.
With 10% down instead, the premium is 0.50%, about $130.55 a month at first, and it stops after 11 years, around $15,958 in total.
Calculated with the same engine as our calculators. Premiums use HUD's method (the average balance of the original schedule for each loan year) and are rounded estimates; your servicer's figures are final.
The main way out: refinance to a conventional loan
A conventional loan needs no mortgage insurance when you borrow 80% or less of the home's value (Fannie Mae Selling Guide B7-1-01). Unlike the FHA rules, this uses the value today, so a rise in home prices counts. In the example, after five years you'd owe about $320,763. If the home appraised at $400,954 or more, only 14.6% above the purchase price, a conventional loan could replace the FHA loan without mortgage insurance.
Between 80% and 95% of value you can still refinance to conventional, with PMI instead of MIP. That PMI can be cancelled on request at 80% of the refinance's appraised value and ends automatically at 78% (CFPB). Compare the two monthly costs before deciding. Our PMI guide covers those rules.
Before you apply, check three things:
- The rate. If your FHA rate is well below today's conventional rates, the higher rate can cost more than the MIP you'd drop. Run both in the refinance break-even calculator.
- Closing costs. Freddie Mac estimates refinancing costs at 3% to 6% of the loan.
- The appraisal. Most refinances need one, at your cost, though some eligible loans get an appraisal waiver (Fannie Mae B4-1.4-10). Check recent sales nearby first.
Refinancing FHA to FHA: the upfront premium refund
An FHA streamline refinance won't remove MIP, but if you refinance into another FHA loan within three years, part of your original upfront premium is credited toward the new one. It isn't paid out as cash. The credit starts at 80% in the first month and falls two points a month:
| Months since closing | 1 | 6 | 12 | 13 | 24 | 25 | 36 | After 36 |
|---|---|---|---|---|---|---|---|---|
| Share of upfront premium credited | 80% | 70% | 58% | 56% | 34% | 32% | 10% | 0% |
If your loan is from before June 2013
Loans that closed from 2001 with a case number before June 3, 2013 drop MIP automatically when the balance reaches 78% of the original value on the original schedule, after at least five years of premiums for terms over 15 years. You can ask to cancel earlier if extra payments got you to 78%, subject to the same five-year minimum and no payment 30 days late in the last year. Ask your servicer to confirm the date.
Related tools
- Refinance break-even calculator: whether a conventional refinance pays for its costs.
- Extra payment calculator: how fast extra payments bring your balance to 80%.
- PMI removal calculator: for conventional loans, or after you refinance.
For education only; not legal or financial advice. Rules depend on when your loan closed, your case number date and your down payment. Premiums in the example are estimates, and your servicer's figures are final. Sources checked September 23, 2026.