Mortgage glossary
Mortgage insurance premium (MIP)
Definition: Mortgage insurance premium (MIP) is the insurance FHA borrowers pay to protect the lender against default, made up of an upfront premium at closing and an annual premium paid monthly.
The upfront premium is usually financed into the loan amount. The annual premium is divided into monthly installments added to the payment. Premium rates depend on the loan amount, the down payment and the loan term, and HUD adjusts them from time to time.
How long MIP lasts matters. With less than 10% down, the annual premium generally stays for the life of the loan; with 10% or more down, it typically ends after 11 years. Many FHA borrowers later refinance into a conventional loan to remove mortgage insurance once they have enough equity.
Related terms
Reviewed by Kyle Richardson, NMLS #863464. General information, not advice for your specific situation. All glossary terms
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