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Run the numbers

The bench

FHA insurance does not stop at 20% equity

The upfront premium, the annual premium, and the part almost every calculator gets wrong: whether it ever comes off.

FHA MIPIllustrative figures onlyShareable as a link

Your numbers

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Mortgage insurance over the life of this loan

$49,142

$6,755 upfront plus 30 yr of annual premium

How long it runs

At 96.5% loan-to-value on a 30-year term, FHA annual MIP runs for the life of the loan (HUD ML 13-04). It does not cancel at 80% or 78% equity the way conventional PMI does — borrowers who want it gone usually refinance out of FHA.

Base loan amount
$386,000
Loan-to-value at origination
96.50%

On the base loan, before the financed upfront premium.

Upfront MIP at 1.75%
$6,755

Normally financed into the loan.

Amount amortised
$392,755
Annual MIP rate
0.55%

The band for a 30-year term at this loan-to-value and loan size.

Monthly MIP, month one
$180.01
Charged for
30 yr
Total FHA insurance
$49,142
Conventional PMI on the same purchase
$25,122
FHA monthly payment
$3,162.49
Conventional monthly payment
$3,116.70
Annual mortgage insurance charged, by year
$0$1k$2kyr 5yr 10yr 15yr 20yr 25yr 30
FHA annual MIP

What this is doing

  • If this were a conventional loan, insurance would stop at month 149 and cost $31,195. Applying that conventional rule to an FHA loan — which is exactly the bug in most calculators — would understate the true cost by $17,947.
  • FHA also charges the annual premium on the balance including the financed upfront premium, so it starts slightly higher than a naive calculation on the base loan.
  • Every figure here is illustrative. It is generated from the numbers you typed using published rules, and it is not a rate quote, a pre-qualification, or an offer of credit.

The rule this page applies

Upfront MIP is 1.75% of the base loan amount. The annual premium is charged on the outstanding balance and its duration depends on the loan-to-value at origination and the term: 11 years at 90% or less, and the full loan term above 90% on terms longer than 15 years. It is not tied to reaching 80% or 78% equity.

Source: HUD Mortgagee Letter 2023-05 (rates) · HUD Mortgagee Letter 13-04 (duration) · HUD Handbook 4000.1

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Questions people ask about this one

Can I get FHA MIP removed?

If the loan-to-value at origination was above 90% on a term longer than 15 years, no — not by paying down the balance. The premium runs for the life of the loan. Borrowers who want out refinance into a conventional loan once they have 20% equity, which means new closing costs and whatever rate is available that day.

Does 20% down remove FHA insurance?

No. It shortens the annual premium to 11 years and puts you in the lowest rate band, but you still pay the 1.75% upfront premium and 132 monthly premiums. At 20% down a conventional loan has no mortgage insurance at all, which is usually the better trade.

Where do these bands come from?

HUD Mortgagee Letter 2023-05 sets the annual rates by term, loan size and loan-to-value; the $726,200 breakpoint splitting the tables comes from the same letter. Mortgagee Letter 13-04 sets the durations. Both are public.

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The rest of the bench

Monthly payment

Principal, interest, taxes, insurance, mortgage insurance and HOA — drawn as five separate threads, not folded into one number.

Amortisation

The full schedule, switchable month-wise and year-wise, with a running total and the crossover month called out.

Affordability

Income, debts and cash in, a defensible price out — and a plain statement of which of the three constraints is the one actually holding the number down.

Refinance

Costs divided by monthly saving is the answer most sites give, and it ignores the fact that a new 30-year term restarts the clock. Both numbers are shown here.

Extra payment

A recurring extra, a one-off lump sum, or both — against the interest they remove and the months they take off the end.

Rent vs buy

Both households start with the same cash. Whichever is cheaper in a given month invests the difference; whichever is dearer draws it down. That symmetry is the whole argument.

VA purchase

The VA funding fee changes with the down payment and with whether it is your first use of the entitlement. Exempt borrowers pay none of it.

VA refinance

An IRRRL carries a 0.50% funding fee; a VA cash-out carries 2.15% or 3.30%. Both are shown against a true break-even.

Points

One point is one percent of the loan, paid today, for a lower rate for as long as you keep it. The only question that matters is how long that is.

HELOC

Interest-only while you draw, then a fully amortising payment that can be several times larger. Both are shown, because the second one is the surprise.

DSCR

Debt-service coverage divides the rent the property brings in by what the property costs to carry. Most lenders want 1.20 or better.

Fix & flip

Acquisition, rehab, points, interest, holding costs and selling costs against the after-repair value — with the cash you actually have to put in.