How to Remove FHA Mortgage Insurance (MIP): The Rules by Loan Date

This isn't a lender policy — it's a federal rule, and lenders have no discretion to waive it. HUD's Mortgagee Letter 2013-04 restructured FHA mortgage insurance specifically to strengthen the Mutual Mortgage Insurance Fund after the 2008 housing crisis: loans with an LTV above 90% at origination — which covers essentially every 3.5%-down FHA loan — pay annual MIP for the full term, up to 30 years. Loans starting at 90% LTV or below pay for 11 years or the remainder of the term, whichever is shorter.

Before that date, FHA worked like conventional PMI: mortgage insurance dropped off automatically once your balance fell to 78% of the original value, through a mix of amortization and appreciation. If your loan predates June 3, 2013, you are still on that older, friendlier rule regardless of how the newer rules read.

For a borrower with less than 10% down and no path to automatic cancellation, refinancing into a conventional loan is the practical exit. Two conditions need to line up.

1. You need roughly 80% LTV or better

Conventional loans drop private mortgage insurance once your loan-to-value ratio reaches 80%, either through paying down principal or your home appreciating. Below that threshold, a conventional refinance carries no mortgage insurance at all — a structural improvement over FHA, where under-10%-down MIP never ends regardless of equity.

2. The math needs to work

Refinancing has its own closing costs, typically 2% to 5% of the loan amount, and it resets you to a new rate at current market pricing. Run the comparison before committing:

Take a $300,000 purchase with 3.5% down at 6.5% — the typical FHA scenario.

Because this borrower put down 3.5%, well under the 10% threshold, that $135.01 monthly MIP runs for all 30 years unless the loan is refinanced or paid off. Over the full term, upfront plus monthly MIP totals roughly $53,670 — a meaningful fraction of the original loan amount, paid for a guarantee that protects the lender, not the borrower.

Compare that against the same borrower putting 5% down instead of 3.5%: the annual MIP rate drops from 0.55% to 0.50%, and the monthly premium falls to about $120.83. The rate difference is small, but it illustrates the general pattern — a larger down payment buys a lower MIP rate on top of the smaller loan amount itself.

MIP and PMI are frequently used interchangeably, and the confusion causes real mistakes — including the belief that FHA mortgage insurance works the way conventional PMI does.

The upfront MIP refund is a narrow benefit that applies in exactly one situation: refinancing from one FHA loan to another FHA loan within three years of the original closing.

Two conditions must both hold: the refinance must be FHA-to-FHA, and it must close within three years of the original loan. A refinance to a conventional loan — the route most borrowers eventually take to escape life-of-loan MIP entirely — forfeits this refund. That trade-off is worth weighing consciously if you're inside the three-year window: the FHA-to-FHA refund is real money, but staying in FHA also means staying subject to MIP rules on the new loan.

How do you get rid of FHA PMI?

FHA insurance is called MIP, not PMI, and the removal path depends on your origination date and down payment. Loans after June 3, 2013 with under 10% down carry MIP for the life of the loan — the only way out is refinancing to a non-FHA loan or paying off the mortgage. With 10% or more down, MIP cancels automatically after 11 years. Loans from before June 2013 cancel at 78% LTV.

When can I drop my FHA MIP?

If you put 10% or more down on a loan originated after June 3, 2013, MIP drops automatically once you've made 11 years of payments — you don't need to request anything, but confirm your servicer has processed it. If you put down less than 10%, there is no drop date; MIP continues for the full loan term unless you refinance or pay off the loan.

Can you remove MIP without refinancing?

Only in two cases: your loan originated before June 3, 2013 and you've reached 78% LTV, or your loan originated after that date with at least 10% down and you've made 11 years of payments. Outside those two situations, refinancing or payoff are the only removal paths.

What is the difference between MIP and PMI?

MIP is FHA's mortgage insurance, required on every FHA loan regardless of down payment, with a 1.75% upfront charge in addition to the annual premium. PMI is conventional mortgage insurance, required only below 20% down, with no upfront charge, and guaranteed removable by federal law once you reach 80% loan-to-value — a guarantee FHA MIP does not offer to most current borrowers.

How much is FHA MIP in 2026?

Upfront MIP is 1.75% of the base loan amount. Annual MIP is 0.55% for loans with less than 5% down and 0.50% for loans with 5% or more down, on the common 30-year-term case — both rates set by HUD Mortgagee Letter 2023-05 and unchanged through 2026.

Do you get a refund of upfront MIP when you refinance?

Only if you refinance from one FHA loan to another FHA loan within three years of the original closing. The refund is prorated by how much time has passed and is credited toward the new loan's upfront MIP. A refinance to a conventional loan gets no refund.