Mortgage Insurance Premium Calculator
FHA loans open the door with 3.5% down, but every one carries mortgage insurance in two parts: a 1.75% upfront charge and an annual premium added to each monthly payment. This mortgage insurance premium calculator prices both parts from your price, down payment, and term, using the full HUD Mortgagee Letter 2023-05 rate chart, and tells you how long the premium lasts. The figure that matters most is stated up front: your monthly premium is charged on your base loan, not on the larger financed total.
Quick Answer
On a $350,000 home with 3.5% down ($12,250), the base FHA loan is $337,750. The upfront MIP is $5,910.63 (1.75%), usually financed into the loan for a $343,660.63 total. The annual rate for a 30-year loan above 95% loan-to-value is 0.55%, which adds $154.80 a month: that is 0.55% of the $337,750 base loan, divided by 12. With less than 10% down, that premium lasts the life of the loan.
- MIP has two parts. A one-time 1.75% upfront charge plus an annual premium (0.15% to 0.75%) folded into every monthly payment.
- The monthly premium follows the base loan. Financing the upfront charge raises the balance you pay interest on, not the balance your MIP is figured on.
- It usually never drops off. With under 10% down, FHA MIP runs for the life of the loan. The only exits are refinancing into a conventional loan or putting 10% or more down for an 11-year term.
- The March 2023 cut still applies. HUD lowered the annual rate to 0.55% for most 30-year borrowers, and estimated the cut would save about 850,000 borrowers an average of $800 a year.
The two premiums inside every FHA loan
FHA mortgage insurance is not one fee but two, and they hit at different times. The upfront MIP is 1.75% of the base loan amount, charged once at closing; most borrowers finance it into the loan rather than paying cash. The annual MIP is a percentage of the base loan, divided into 12 and added to each payment. Both exist to protect the lender, not you, which is why FHA can approve buyers that conventional lenders would turn away.
Step 1: Upfront MIP. $337,750 times 1.75% equals $5,910.63, charged at closing and usually financed.
Step 2: Financed balance. $337,750 plus $5,910.63 equals $343,660.63. That larger figure sets your principal and interest payment. It does not set your MIP.
Step 3: Annual MIP. $337,750 times 0.55% divided by 12 equals $154.80 a month, for the life of the loan at this down payment.
The distinction in Step 2 and Step 3 is the point most calculators blur. HUD Mortgagee Letter 2023-05 prints every annual rate against the base loan amount and the loan-to-value at origination, and the worked examples published from it multiply the base loan, not the financed total. A calculator that applies the rate to the financed total overstates the monthly premium by exactly 1.75%: on the worked example, $157.51 instead of the correct $154.80. That is $2.71 a month, $32.52 a year, for an error that compounds across the whole life of the loan in any total-cost figure built on it. This calculator charges the annual rate on the base loan and shows the financed total separately, so neither number is hidden.
One honest caveat: your servicer figures each year's premium from the average outstanding balance over that year rather than from a single flat figure, so the actual monthly amount eases down slightly as you pay principal. The base-loan figure here is the standard estimate used in HUD-rate worked examples, and it is the number your Loan Estimate will resemble most closely in year one. If your lender quotes a monthly MIP a few dollars below this figure, the average-balance method is the likely reason, not a different rate.
2026 FHA annual MIP rate chart
Your annual rate depends on the term, the loan-to-value ratio at origination, and the size of the base loan. These are the Mortgagee Letter 2023-05 rates for case numbers assigned on or after March 20, 2023, and they remain the published schedule. Note the breakpoint: the letter prints $726,200 as the line between the standard and higher-balance tiers. If your base loan sits near that line, confirm the tier on your Loan Estimate, since HUD ties the breakpoint to the conforming limit.
Base loan of $726,200 or less
| Loan term | Loan-to-value | Annual MIP | Duration |
|---|---|---|---|
| More than 15 years | 90% or less | 0.50% | 11 years |
| More than 15 years | Over 90% to 95% | 0.50% | Full loan term |
| More than 15 years | Over 95% | 0.55% | Full loan term |
| 15 years or less | 90% or less | 0.15% | 11 years |
| 15 years or less | Over 90% | 0.40% | Full loan term |
Base loan over $726,200
| Loan term | Loan-to-value | Annual MIP | Duration |
|---|---|---|---|
| More than 15 years | 90% or less | 0.70% | 11 years |
| More than 15 years | Over 90% to 95% | 0.70% | Full loan term |
| More than 15 years | Over 95% | 0.75% | Full loan term |
| 15 years or less | 78% or less | 0.15% | 11 years |
| 15 years or less | Over 78% to 90% | 0.40% | 11 years |
| 15 years or less | Over 90% | 0.65% | Full loan term |
Two worked examples show why the higher-balance tier matters. At 10% down on a $400,000 home, the base loan is $360,000, the rate is 0.50%, and the monthly MIP is $150, cancelling after 11 years. At 3.5% down on a $900,000 home, the base loan is $868,500, which crosses into the higher-balance tier: the rate is 0.75%, not 0.55%, so the monthly MIP is $542.81 for the life of the loan. A calculator that still uses the standard 0.55% rate on the financed total would quote $405.03 a month for that borrower, understating the premium by $137.78 a month. Before you commit, check what payment the full loan produces with our mortgage payment calculator, and see the whole monthly picture, including tax and insurance escrows, with our escrow deposit calculator.
FHA MIP vs conventional PMI
The two premiums look alike but behave very differently. The deciding factor is usually not the monthly number, it is the exit: conventional PMI has one, FHA MIP mostly does not.
| FHA MIP | Conventional PMI | |
|---|---|---|
| Upfront charge | 1.75% of the base loan, usually financed | None in most cases |
| Annual cost | 0.15% to 0.75%, fixed by the HUD chart | Priced by credit score and down payment, varies by borrower |
| Cancellation | Life of loan under 10% down; 11 years at 10% or more down | Automatic at 78% loan-to-value, requestable at 80% |
| Credit score effect | None: same MIP chart for every borrower | Large: better credit means cheaper PMI |
That last row cuts both ways. A borrower with a weaker credit file often pays less in total with FHA, because conventional PMI prices their credit directly. A borrower with strong credit and 10% down may pay less with conventional PMI, because it cancels at 80% loan-to-value while FHA MIP still runs 11 years. Run both: our mortgage PMI calculator prices the conventional side, and our FHA home calculator rolls MIP into a full monthly payment with tax and insurance.
How long you pay it, and how to stop
Three exits exist. First, refinance into a conventional loan once you reach 20% equity: the standard play, and the only one that works with minimum down. Second, put 10% or more down up front to earn the 11-year cancellation. Third, an FHA Streamline refinance if you already hold an older FHA loan, which carries a token 0.01% upfront premium for loans originated before May 31, 2009. That pool of eligible borrowers shrinks every year.
The duration is also what makes the total cost so large. At a flat 0.55% on a $300,000 base loan, 30 years of monthly MIP totals $49,500 before any balance decline, on top of the $5,250 upfront charge. The real total comes in lower, because the servicer's average-balance method shrinks the premium as principal falls, but the order of magnitude is the point: a premium that lasts 30 years costs multiples of one that cancels. That is why the refinance exit matters more than shaving a few dollars off the monthly figure, and why buyers who expect to build equity fast should price the conventional route before they close on FHA.
What most MIP calculators leave out
Simple MIP tools multiply the loan by 0.55% and stop, which misses four things that move real money. They apply the rate to the financed total instead of the base loan, overstating every monthly figure by 1.75%. They ignore the higher-balance tiers, quoting the standard rate to borrowers who owe 0.70% or 0.75%. They never mention duration, which is the whole story: a premium that lasts 30 years costs multiples of one that cancels after 11 years. And they quote one rate for every borrower instead of the term and loan-to-value tiers in the HUD chart. This calculator prices all eleven rate tiers, charges the annual rate on the base loan, states the duration up front, and shows the financed total as its own line so you can see exactly what financing the upfront charge does and does not change.
Frequently Asked Questions
Two charges: 1.75% of the base loan upfront (usually financed), plus an annual premium of 0.15% to 0.75% paid monthly. The typical 30-year borrower with 3.5% down pays 0.55% a year, which is $154.80 a month on a $337,750 base loan.
Usually not on its own. With less than 10% down it lasts the life of the loan; with 10% or more down it cancels after 11 years. Otherwise the only exit is refinancing into a conventional mortgage.
Yes, and most borrowers do. The 1.75% is added to the loan balance at closing, which raises your principal and interest payment. It does not raise your MIP, because the annual premium is charged on the base loan.
MIP is FHA insurance: 1.75% upfront plus annual premiums that usually last the life of the loan. PMI is conventional insurance: no upfront charge, a credit-priced annual cost, and automatic cancellation at 78% loan-to-value.
Yes. Mortgagee Letter 2023-05 cut the annual MIP for most 30-year borrowers from 0.85% to 0.55%. HUD estimated the cut would save about 850,000 borrowers an average of $800 a year, and that reduced schedule is still in force.
The mortgage insurance deduction has expired and been revived by Congress multiple times, so its status changes with tax legislation. Check the current IRS guidance for the tax year you are filing before claiming it.
For FHA loans originated before May 31, 2009, a Streamline refinance carries a token 0.01% upfront MIP, effectively zero. That pool of eligible borrowers shrinks every year.
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References
U.S. Department of Housing and Urban Development. Mortgagee Letter 2023-05: Reduction of FHA Annual Mortgage Insurance Premium Rates (February 22, 2023; case numbers on or after March 20, 2023).
LendingTree. FHA Mortgage Insurance: How It Works and How Much It Costs (base-loan worked example: $300,000 times 0.55% divided by 12 equals $137.50 a month).
BestMoney. What Is Mortgage Insurance? PMI and MIP Costs 2026 (annual MIP as a percent of base loan amount per year).
LegalClarity. How to Calculate FHA MIP: Upfront and Monthly Costs (servicer average-balance method and the 2023-05 tiers).