If you have an FHA loan, one of the recurring costs you’re likely paying is Mortgage Insurance Premium (MIP). While FHA loans are fantastic for homebuyers with lower credit scores or limited savings, the FHA MIP can stick around longer than you’d like. So the big question is: Can you cancel MIP on an FHA loan? The good news is — yes, in some cases you can. Let’s break it down together.
What Is FHA MIP and Why Is It Required?
FHA MIP is insurance that protects the lender in case you default on your mortgage. Unlike private mortgage insurance (PMI) used for conventional loans — which can typically be removed after reaching 20% equity — FHA MIP follows different rules.
There are two parts to MIP:
- Upfront MIP (UFMIP): Paid at closing (typically 1.75% of the loan).
- Annual MIP: Paid monthly as part of your mortgage payment.
While UFMIP is a one-time cost, annual MIP continues for a set number of years — or even for the life of the loan, depending on your loan terms and down payment.
FHA Loans: When MIP Stays for Life
If your FHA loan originated after June 3, 2013, your ability to cancel MIP depends largely on how much you put down and the term of the loan:
- Loan with less than 10% down:
MIP is required for the life of the loan. - Loan with 10% or more down:
MIP can be canceled after 11 years.
This means many FHA borrowers will continue paying MIP unless they take specific steps to remove it — and that’s where refinancing comes in.
How to Remove MIP: Your Options
1. Refinance to a Conventional Loan
This is by far the most common and effective way to eliminate MIP. If you’ve built up at least 20% equity in your home and your credit score has improved, you may qualify for a conventional mortgage — which doesn’t require ongoing mortgage insurance once you pass that equity threshold.
✅ Bonus: If current interest rates are lower than when you got your FHA loan, you could also reduce your monthly payment by refinancing.
Checklist to Refinance:
- 20% or more home equity
- Strong credit score (usually 620+)
- Stable income and employment history
Even if you’re not quite at 20% equity, some lenders offer PMI-free loans at slightly higher rates — it’s worth exploring.
2. Pay Down Your Loan Faster
If refinancing isn’t immediately an option, consider making extra payments toward your principal. This helps you build equity faster and puts you in a better position to refinance in the future.
Even an extra payment or two per year can speed up your timeline significantly.
3. Consider a 15-Year FHA Loan from the Start
This option won’t help if you already have a 30-year FHA loan, but it’s worth mentioning. FHA loans with 15-year terms and at least 10% down have lower MIP rates and shorter MIP duration — sometimes as little as 11 years.
If you’re planning to buy a new home or refinance soon, this could be a great long-term savings strategy.
When You Can’t Cancel FHA MIP
Unfortunately, if you made a small down payment and don’t have much equity yet, MIP will remain until:
- You refinance
- You sell your home
- You pay off the mortgage
This is why understanding your MIP situation is essential — it affects your total loan cost and monthly budget.
So, Is It Worth Trying to Remove MIP?
Yes — if your financial situation has improved, removing MIP can save you thousands of dollars over the life of your mortgage. It gives you more control over your monthly expenses and frees up funds for other life goals, like investing, saving for college, or home renovations.
We’re Here to Help You Take That Step
At Green Arrow Mortgage, we don’t just help you get a loan — we help you optimize it over time. If you’re wondering whether you qualify to remove MIP or if refinancing makes sense for you, we’re ready to explore your options together.
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