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FHA loans require two types of mortgage insurance premiums (MIP): an Upfront MIP (UFMIP) equal to 1.75% of the base loan amount (financed directly into your loan balance at closing), and an ongoing Annual MIP (typically 0.55% of the loan amount for 30-year loans with under 10% down), which is divided into 12 monthly payments.

If you put down less than 10% at purchase (LTV > 90%), federal FHA rules require annual MIP to remain for the entire 30-year life of the loan. If you put down 10% or more (LTV <= 90%), annual MIP automatically cancels after 11 years (132 monthly payments).

The minimum down payment for an FHA-insured mortgage is 3.5% of the purchase price for borrowers with a credit score of 580 or higher. Borrowers with credit scores between 500 and 579 require a 10% down payment.

Conventional PMI has zero upfront fees and automatically cancels at 78% LTV under the Homeowners Protection Act (HPA), whereas FHA requires a 1.75% upfront fee and retains monthly MIP for the full 30-year term (for <10% down). For a complete side-by-side analysis, credit score rules, and long-term cost matrix, see our full FHA vs. Conventional guide below.

Yes. Nearly all FHA borrowers finance the 1.75% Upfront MIP into their total loan balance rather than paying it out of pocket in cash at closing. For example, on a $300,000 base loan, adding 1.75% ($5,250) results in a total starting loan balance of $305,250.