Definition
FHA mortgage insurance premiums, or MIP, are required for all FHA loans. There's an upfront premium paid at closing, plus an annual premium that is added to your monthly payments.
Understanding FHA MIP Basics
FHA mortgage insurance premiums are part of the cost when you get an FHA loan. They help protect lenders, making it easier for them to offer loans to more buyers. In simple terms, you pay an upfront MIP, and then a monthly MIP is added to your mortgage payment. Example: On a $200,000 FHA loan, you might pay a 1.75% upfront MIP, which is $3,500. Then, a small percentage of your loan amount is added monthly. It's not a one-time charge; it continues for the life of the loan or until certain conditions are met. Some borrowers think MIP disappears automatically after a few years, but that's not the case.
