FHA loans carry two separate mortgage insurance charges, and one of them can follow you for the entire length of the loan. There is an upfront premium you paid at closing, and an annual premium split into your monthly payment, called MIP. That monthly piece is the one most people want gone, and whether you can cancel it comes down to how much you put down when you first got the loan.
If you put down less than 10 percent, which describes most FHA borrowers, your mortgage insurance does not fall off on its own, it stays for the life of the loan. That surprises people who assume FHA insurance works like the insurance on a regular mortgage, where it drops once you reach 20 percent equity. FHA changed its rules in 2013, and for loans taken out since then, the low down payment version means permanent insurance until you get out of the loan entirely.
When FHA mortgage insurance comes off by itself
There are only a few situations where the insurance cancels without you refinancing.
- You put down 10 percent or more at closing. In that case the annual MIP drops off automatically after 11 years.
- You have an older FHA loan from before June 2013. Those follow the earlier rules and can cancel once you reach 22 percent equity.
- You pay the loan off or sell the home, which ends the insurance along with the loan.
For everyone else, waiting will not remove it. The premium keeps coming out every month no matter how much equity you build through payments or rising home values. This is the part the government reference pages tend to bury, and it is why so many homeowners are surprised years in.
| Your down payment | Does MIP cancel on its own? | How it comes off |
|---|---|---|
| Less than 10 percent | No, it lasts the life of the loan | Refinance into a regular mortgage |
| 10 percent or more | Yes, after 11 years | Automatic, or refinance sooner |
| Any amount, loan before June 2013 | Yes, at 22 percent equity | Automatic under older rules |
Refinancing is how most people actually remove it
For the typical FHA borrower who put down 3.5 percent, the real path off mortgage insurance is refinancing into a regular mortgage. Once your home has enough equity, usually 20 percent, you can replace the FHA loan with a conventional one that carries no monthly insurance at all. The FHA premium disappears because the FHA loan is gone.
There are two parts to the math:
The first is your current interest rate compared to today's rates.
The second is how much you are paying in monthly MIP. On a typical loan, that premium runs 0.55 percent of the balance per year, which is around $138 a month on a $300,000 loan. If you can refinance without your rate jumping much, cutting that payment often makes the move worth it even when rates are higher than what you have now.
We run this calculation for FHA homeowners regularly, and the answer is not always yes. The only way to know is to compare your current payment against a refinanced one side by side, which you can start with our refinance analysis calculator. If you are close to the equity threshold, our mortgage payment calculator helps you see where a new payment would land.
What you need before you can refinance out of MIP
Enough equity is the main requirement, generally 20 percent, based on a current appraisal rather than what you paid for the home. In much of Florida, home values have climbed enough that borrowers hit that mark faster than they expect. You will also need a credit score that qualifies for conventional pricing, steady income the lender can document, and a home that appraises where you need it to.
If your equity is not quite there yet, waiting a bit or making a larger payment toward principal can close the gap. This is worth understanding alongside the broader tradeoffs in our breakdown of FHA versus a regular mortgage, since moving off FHA changes more than just the insurance.
Want to know if you can drop your FHA insurance?
Send us your current loan details and we will run the numbers on whether refinancing out of MIP saves you money at today's rates. Apply in four steps or set up a call.
