Yes, but only in one situation. If you refinance your FHA loan into another FHA loan within three years, HUD gives part of your upfront mortgage insurance back. If you refinance into a conventional loan, you get nothing.

Most people don’t know this refund exists. It can be worth thousands of dollars. Here’s how it works.

First, What Is Upfront MIP?

Every FHA loan has two kinds of mortgage insurance.

Upfront MIP is a one-time fee. It costs 1.75% of your loan amount. On a $300,000 loan, that’s $5,250. Most people don’t pay it in cash. They add it to the loan and pay it off over time.

Annual MIP is the monthly part. It runs about 0.55% a year for most borrowers.

The refund only applies to the upfront fee. You never get the monthly payments back.

How the MIP Refund Works

When you refinance one FHA loan into another FHA loan, HUD looks at how long you had the old loan. Then it gives back part of what you paid upfront.

The sooner you refinance, the bigger the refund. The amount drops every month. After three years, it drops to zero.

When you refinance Roughly how much comes back
Months 1–6 About 70% to 80%
Months 7–12 About 55% to 65%
Months 13–24 About 25% to 50%
Months 25–35 About 10% to 20%
Month 36 and later Nothing

These are approximate. HUD publishes an exact month-by-month schedule. Ask your lender for the number that applies to your loan.

You Don’t Get a Check

This part surprises people. The refund is not cash.

HUD applies it as a credit toward the new upfront MIP on your new FHA loan. So your new loan starts smaller than it otherwise would.

Here’s an example. Say you took an FHA loan 14 months ago and paid $5,250 in upfront MIP. You refinance into a new FHA loan. Your refund is around 40%, or about $2,100.

Your new loan also charges 1.75% upfront. If your new loan is $295,000, that fee is $5,163. The refund knocks it down to about $3,063.

You saved $2,100. But you never touched the money.

The Rule That Costs People the Most

You only get the refund on an FHA-to-FHA refinance. If you refinance your FHA loan into a conventional loan, the refund is gone. Even if you do it in month two.

This creates a real choice, and I walk clients through it often.

Many people want to leave FHA. That’s because FHA mortgage insurance usually never goes away. If you put less than 10% down, you pay it for the life of the loan. Conventional mortgage insurance stops once you own 20% of your home.

So you have to weigh two things:

  • Stay with FHA and get the refund now
  • Move to conventional, lose the refund, but stop paying mortgage insurance forever

For most people who have enough equity, dropping the mortgage insurance is worth far more than the refund. Learn more about removing FHA mortgage insurance.

Which Refinances Qualify

Type of refinance Do you get a refund?
FHA Streamline Refinance Yes, if within 3 years
FHA rate-and-term refinance Yes, if within 3 years
FHA cash-out refinance Yes, if within 3 years
FHA to conventional No
FHA to VA or USDA No
Selling your home No

How to Find Out What You’d Get

Ask your lender for the refund amount before you decide anything. They can look it up in HUD’s system in a few minutes. It’s a real number, not an estimate.

Do this early. The refund shrinks every single month you wait.

Then compare two things. First, the refund amount. Second, what you’d save by moving to a conventional loan and dropping mortgage insurance. Run both before you pick.

Common Questions

Can I get the refund in cash?

No. HUD applies it as a credit against the upfront MIP on your new FHA loan. It lowers your new loan balance instead of paying you.

What if I sell my house instead of refinancing?

You don’t get a refund. The upfront MIP refund only happens when you replace one FHA loan with another FHA loan.

Does the FHA Streamline Refinance qualify?

Yes. The Streamline is FHA-to-FHA, so it qualifies. It’s also the fastest and cheapest FHA refinance — no new appraisal and no income check in most cases. See our guide to the FHA Streamline Refinance.

How do I know my exact refund?

Only your lender can pull it. They check HUD’s system using your case number. Ask before you apply anywhere, because the number drops each month.

Sources: 

Consumer Financial Protection Bureau. (2026). What is mortgage insurance and how does it work? 

U.S. Department of Housing and Urban Development. (2026). FHA single family housing policy handbook 4000.1. 

This article is for general information. It is not personal financial advice. FHA rules change. Check with an FHA-approved lender about your situation. RefiGuide.org is an advertising marketplace, not a lender.