FHA loans include mortgage insurance (MIP) — an upfront premium plus a monthly one. Here's exactly what it costs, how long it lasts, and how to eventually remove it.
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Every FHA loan includes mortgage insurance, which is what allows lenders to offer low down payments and flexible credit. It comes in two parts: a one-time upfront premium and an ongoing annual premium paid monthly.
The upfront mortgage insurance premium is 1.75% of the loan amount. It's almost always financed into your loan rather than paid in cash. On a $300,000 loan, that's about $5,250 added to the balance.
The annual premium — commonly around 0.55% of the loan amount per year for a typical 30-year loan with the minimum down payment — is divided into 12 and added to your monthly payment. On that same $300,000 loan, that's roughly $138 per month.
This is the key detail many buyers miss: if you put down less than 10%, annual MIP stays for the life of the loan. If you put down 10% or more, it drops off after 11 years. Either way, many Florida homeowners eventually refinance into a conventional loan once they reach roughly 20% equity to remove mortgage insurance entirely.
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