Can You Remove FHA Mortgage Insurance (MIP) Later?

If you used an FHA loan to buy your home, you're likely paying mortgage insurance as part of your monthly mortgage payment. This is known as MIP, or Mortgage Insurance Premium, and it’s a required part of nearly every FHA loan.

One of the most common questions Bethany Ashby hears from homeowners at easttexaslending.com/home is: Can I ever get rid of this cost?

The answer depends on a few key factors.

What Is MIP?

Mortgage Insurance Premium is a form of insurance that protects the lender if the borrower defaults on their FHA loan. It includes:

• An upfront premium, usually 1.75 percent of the loan amount, paid at closing or rolled into the loan

• An annual premium, broken into monthly payments, added to your regular mortgage bill

Unlike conventional loans, FHA loans require this insurance for longer periods — sometimes for the life of the loan.

When Can You Remove MIP?

Whether you can remove MIP depends on two main details: the date your loan began and how much you put down at the time of purchase.

Loans Originated Before June 3, 2013

If your loan was issued before this date, you may be eligible to cancel MIP once you reach 78 percent of the original loan balance, provided you've made at least five years of payments.

Loans Originated On or After June 3, 2013

The rules changed after this date.

• If you put 10 percent or more down, MIP will automatically cancel after 11 years

• If you put less than 10 percent down, MIP typically stays for the full life of the loan

Bethany Ashby encourages clients to check their loan paperwork or speak with a lender to confirm which category they fall into.

Can You Refinance to Remove MIP?

Yes. If your home has gained enough equity and your credit is in good shape, refinancing into a conventional loan is often the only way to remove MIP completely. Conventional loans only require private mortgage insurance (PMI) when the borrower puts less than 20 percent down — and PMI can be dropped once you hit that equity mark.

Many East Texas homeowners use this strategy a few years after buying with an FHA loan. Bethany Ashby recommends reviewing your mortgage annually to see if you’re in a position to refinance.

Final Thoughts

While FHA loans make homeownership more accessible, the long-term cost of MIP can be significant. Fortunately, there are paths to remove it — either through automatic cancellation or refinancing into a conventional loan.

If you're unsure whether your loan qualifies or want help reviewing your refinance options, Bethany Ashby can walk you through the next steps. Visit easttexaslending.com/home to learn more and explore your options.

Sources:
HUD.gov, FHA Handbook, NAR.realtor, Bankrate.com