I have an FHA loan. If I had to pay an upfront MIP, why do I also
have a monthly risk-based insurance premium?
-- Rob Redouble
Borrowers financing with Federal Housing Administration loans pay
insurance premiums for the federal government guarantee that the
lender will not lose any principal on the transaction. The mortgage
insurance premium, or MIP, is split between an upfront payment and
a monthly insurance premium.
The upfront mortgage insurance
premium is 1.5 percent for 30-year fixed-rate mortgages. Any unused
portion of this upfront MIP may be refunded within the first seven
years of the loan. The monthly insurance payment is based on 0.5
percent per year of the loan amount, but is not refundable, only
Since 2001, the government has allowed the monthly
insurance payment to be canceled when the outstanding principal
balance reaches 78 percent of the original purchase price, providing
the payments have been made for at least five years on a 30-year
A 15-year FHA loan when the homeowner made at least
a 10 percent down payment wouldn't have a monthly mortgage insurance premium.
Thumb through the FHA
Library to learn more about FHA loans. Although the site is maintained by
a lender, it is laid out well and can answer most questions you have about these