How to Get Rid of FHA Mortgage Insurance

FHA mortgages are insured by the Federal Housing Administration (FHA) and are a lifeline for first-time homebuyers and those with lower credit scores or smaller down payments. However, they come with a mandatory mortgage insurance premium (MIP) that protects lenders if you default, adding to your monthly costs. Unlike private mortgage insurance or PMI on conventional loans, which can often be canceled once you reach 20% equity, FHA MIP has stricter rules that depend on your loan’s origination date and down payment. Removing PMI or MIP can save hundreds annually, freeing up funds for other goals.

Understanding FHA Mortgage Insurance Rules

The RefiGuide publishes this article to explain how to get rid of FHA mortgage insurance premium and we ranked the top FHA lenders in 2025 with their rates and closing costs, provides three case studies, and offers practical steps to achieve MIP removal.

FHA loans require two types of MIP:

• Upfront Mortgage Insurance Premium (UFMIP): A one-time fee, typically 1.75% of the loan amount, paid at closing or rolled into the loan.

• Annual Mortgage Insurance Premium (MIP): A monthly fee, ranging from 0.15% to 0.75% of the loan amount annually (most borrowers pay 0.55%), added to your mortgage payment.

The annual MIP is the focus of removal efforts, as it significantly impacts long-term costs. For example, on a $250,000 FHA loan, the annual MIP at 0.55% adds about $1,375 per year, or $115 monthly. Removing this can substantially lower your housing expenses.

How to Remove FHA Mortgage Insurance (MIP)

The ability to cancel FHA MIP depends on when your FHA loan was originated and your initial down payment. Here’s a breakdown based on current guidelines:

The LTV ratio is calculated by dividing your current loan balance by the home’s original value (for older loans) or appraised value (for refinancing). For instance, a $200,000 home with a $156,000 loan balance has a 78% LTV. (Learn more about no PMI loans)

10 Tidbits to Remove PMI from FHA Mortgage Loans

Removing private mortgage insurance (PMI), or more accurately, the FHA’s mortgage insurance premium (MIP), from an FHA mortgage loan can save homeowners significant costs, but it requires understanding specific rules based on loan origination and down payment.

1. First, check your loan’s origination date: for loans before June 3, 2013, MIP cancels automatically when the loan-to-value (LTV) ratio hits 78% based on the original value, typically after 5–10 years of on-time payments.
2. Second, for loans after June 3, 2013, with 10% or more down, MIP ends after 11 years; with less than 10%, it’s lifelong unless you refinance.
3. Third, accelerate MIP removal for pre-2013 loans by making extra principal payments to reach 78% LTV faster—use a mortgage calculator to track progress.
4. Fourth, refinance to a conventional loan with at least 20% equity to eliminate MIP entirely, ideal for post-2013 loans with lifelong MIP, but ensure the new rate (e.g., 6.5–7.5% in 2025) and closing costs (2–5%) justify savings.
5. Fifth, confirm your home’s value through an appraisal, as appreciation may boost equity to 20% for refinancing without PMI.
6. Sixth, maintain a credit score of 620+ (ideally 740+) to qualify for better conventional loan rates, reducing refinancing costs.
7. Seventh, monitor your amortization schedule to anticipate when automatic cancellation applies, and contact your servicer if MIP continues past eligibility.
8. Eighth, avoid an FHA Streamline Refinance for MIP removal, as it retains MIP; opt for a conventional refinance instead.
9. Ninth, explore loan modification with your lender if refinancing isn’t viable, though MIP typically remains.
10. Tenth, consult a financial advisor to weigh options, as closing costs ($4,000–$10,000 on a $200,000 loan) and market conditions (e.g., home value trends) impact decisions.

For example, a homeowner with a $250,000 FHA loan from 2015 with 5% down could refinance to a conventional loan in 2025 with 25% equity (home value at $350,000), saving $1,380 annually on MIP. Always verify eligibility with your mortgage company and use tools like Bankrate’s calculator to ensure cost-effectiveness.

Methods to Remove FHA Mortgage Insurance

There are three primary ways to remove FHA MIP, depending on your loan’s eligibility:

1. Automatic Cancellation

For loans eligible for cancellation:

• Loans from January 2001 to June 3, 2013: MIP stops automatically when your LTV reaches 78%, based on the original amortization schedule. This typically happens after 5–10 years, depending on your loan term and payments.

• Loans after June 3, 2013 with ≥10% down: MIP is canceled after 11 years of on-time payments.

Your lender should automatically stop charging MIP when these conditions are met, provided your payments are current. Contact your servicer if the MIP continues beyond the eligible date.

2. Paying Down the Loan

For loans originated between January 2001 and June 3, 2013, making extra principal payments can accelerate reaching the 78% LTV threshold. For example, adding $100 monthly to a $200,000 loan could shave years off the MIP period. Once the LTV hits 78%, the servicer should cancel MIP automatically, but you may need to confirm with them.

3. Refinancing to a Conventional Loan

For loans with lifelong MIP (post-June 3, 2013, with <10% down) or to remove MIP sooner, refinancing to a conventional loan is often the best option. To avoid PMI on a conventional loan, you need at least 20% equity, which may come from paying down the loan or home value appreciation. Key considerations include:

• Interest Rates: Refinance only if the new rate is at least 0.5–0.75% lower than your current rate to justify costs (check rates at Bankrate).

• Equity: An appraisal is required to confirm at least 20% equity to avoid PMI.

• Closing Costs: Typically 2–5% of the loan amount, which may offset savings (use a refinance calculator at Bankrate).

• Credit Score: A minimum of 620 is needed for conventional loans, but 740+ secures better rates.

An FHA Streamline Refinance can lower your rate but won’t remove MIP, so it’s less effective for this goal.

2025 Top FHA Lenders to Get Rid of PMI

When refinancing to get rid of  PMI with an FHA loan, choosing a reputable lender is crucial. Below are the top 12 rated FHA lenders in 2025, based on loan volume, customer satisfaction, and offerings. FHA loan rates and closing costs vary by borrower, credit score, and location, so contact lenders for personalized quotes.

Note: The national average 30-year FHA mortgage APR is approximately 6.96% as of June 2025, per Bankrate. Closing costs typically range from 2% to 5% of the loan amount (e.g., $4,000–$10,000 on a $200,000 loan). Rates vary based on credit score (580 minimum for 3.5% down, 500 for 10% down), DTI (max 43%), and location. Contact FHA lenders for current rates and fees.

Case Study 1: Automatic Cancellation After 11 Years

Borrower: John, a homeowner in Ohio.
Loan Details: Took out a $200,000 FHA loan in July 2013 with a 10% down payment ($20,000).
Action: John made on-time payments for 11 years. In July 2024, his lender automatically canceled the MIP, as his FHA loan terms allowed cancellation after 11 years with a 10% down payment.
Outcome: His monthly payment dropped by $92 (0.55% MIP), saving him $1,104 annually, which he redirected to retirement savings.

Case Study 2: Refinancing to Remove Lifelong MIP

Borrower: Sarah, a first-time buyer in Florida.
Loan Details: Secured a $250,000 FHA loan in 2015 with a 5% down payment, requiring lifelong MIP.
Action: By 2025, her home’s value rose to $350,000, and she paid down $30,000 of the principal, achieving 25% equity. She refinanced with Pennymac to a conventional loan at 6.5% APR, avoiding PMI.
Outcome: Sarah eliminated her $115 monthly MIP, saving $1,380 yearly, and reduced her interest rate, offsetting the 3% closing costs within two years.

Case Study 3: Accelerating LTV for Older Loans

Borrower: Mike, a homeowner in Texas.
Loan Details: Obtained a $180,000 FHA loan in 2010 with a 3.5% down payment.
Action: By 2025, Mike made extra payments of $200 monthly, reducing his loan balance to $140,400, hitting 78% LTV based on the original $180,000 value. His servicer automatically canceled the MIP.
Outcome: Mike’s monthly payment decreased by $83, saving $996 annually, which he used for home improvements.

Practical Steps to Remove FHA MIP

1. Review Loan Documents: Check your loan’s origination date and down payment to determine MIP rules. Contact your servicer for details.

2. Monitor Equity: Use an amortization schedule or appraisal to track your LTV. Online tools like Bankrate’s calculator can help.

3. Make Extra Payments: For loans eligible for 78% LTV cancellation, pay extra toward the principal to reach this threshold faster.

4. Explore Refinancing: Compare rates from top lenders like PNC or Pennymac. Ensure the new loan’s rate and closing costs justify the switch.

5. Consult Your Lender: If eligible for automatic cancellation, confirm with your servicer. For refinancing, work with an FHA-approved lender to explore conventional options.

6. Consider Costs vs. Savings: Refinancing involves closing costs, so calculate the break-even point to ensure MIP removal saves money over time.

Considerations

• Refinancing Risks: If your LTV is above 80% after refinancing, you may face PMI, which could be costlier than MIP. Ensure sufficient equity.

• Market Conditions: Home value appreciation can boost equity, making refinancing viable. In declining markets, building equity may take longer.

• Credit and DTI: A credit score of 620+ and DTI below 43% improve refinancing chances. Higher scores (740+) secure better rates.

• Loan Modification: If refinancing isn’t feasible, ask your servicer about modifying your FHA loan to lower payments, though MIP remains (Bankrate).

Takeaways on How to Remove FHA Mortgage Insurance

Removing FHA mortgage insurance can significantly reduce your monthly expenses, but the process depends on your loan’s origination date and down payment. For loans before June 3, 2013, reaching 78% LTV triggers automatic cancellation, while loans after that date with less than 10% down require refinancing to a conventional loan with 20% equity. The top 12 FHA lenders, such as PNC Bank and Pennymac, offer competitive rates and refinancing options to help eliminate MIP. By understanding your eligibility, monitoring equity, and comparing lenders, you can make an informed decision to lower your housing costs. Always consult your FHA lender or a financial advisor to tailor the best strategy for your situation.

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